Mexican Tax Reform Update – October 2013

On October 17, the Mexican Congress modified the proposed tax reform that was prepared by the executive branch (led by President Enrique Peña Nieto) and forwarded to Congress on September 8. The executive branch's tax proposal had met with opposition from conservatives in Congress and many in the global business community who expressed concern that the adverse tax impact on multinationals and domestic corporations would negatively affect Mexico's investment climate. Many of the corporate tax increases proposed by the executive branch were removed in the tax reform legislation prepared by Congress.

The two houses of the Mexican Congress (i.e., the Chamber of Deputies and the Senate) will debate provisions of the tax reform package during the next few days, and the reform is expected to be approved—either in its current form or with amendments—by October 31. Notable provisions are described below, including tax rate changes, flat tax repeal, VAT reform, and other