2016 Brings Tax Changes For Foreign Pension Funds In Mexico

Mexico is one of the few countries with a special exemption regime for foreign pension funds investing in the country. This exemption was incorporated into the tax system as a general withholding exemption for such funds when obtaining any type of Mexican source income through a presidential decree published on March 25 1992, and then into the Income Tax Law in July of that year. Raul Morales Medrano of Chevez, Ruiz, Zamarripa y Cía, outlines the latest changes impacting pension funds in Mexico.

In 1995, the possibility for such pension funds to invest in Mexico through foreign persons or investment funds to maintain the exemption was incorporated through administrative rules, as it was necessary for the regime to properly function considering that, in certain cases, regulatory restrictions limited funds to invest directly in Mexico. These intermediate vehicles needed to be registered in a special registry created for such purpose.