TAX REFORM OF THE UNITED STATES OF AMERICA (USA) ACTIVE SINCE JANUARY 2018 AND SUGGESTION TO THE MEXICAN GOVERNMENT

 On December 20th, 2017, the Chamber of Representatives and the Senate that make up the Congress in the USA approved the "Tax Reform Project", proposed by the Republican Party and strongly promoted by the head of the Executive Power, among others the reform includes the following:

  1. Reduction of the Income Tax (ISR) of the companies, from 35 to 21%.
  2. Tax deduction of 20% for owners of small businesses.
  3. Cancellation of the costs of new equipment by corporations.
  4. Eliminate the alternative minimum tax to companies. The current seven individual tax brackets would be maintained, with rates of 10, 12, 22, 24, 32, 35% and a maximum rate of 37% for taxpayers with higher income, which currently stands at 39.6%.

OPTIMIZATION OF THE INCOME TAX BASE

  1. Allow 100% deduction of investments in automobiles, via tax depreciation (25% annual) that are used in the activity of the company.
  2. Do not limit the deduction on restaurant meals when these meals are business.
  3. Do not limit the deduction of social security benefits to 53% and allow them to 100%.

TAX INCENTIVES

  1. Allow all taxpayers the immediate deduction in investments, in new goods, mainly in machinery and equipment, without the limitation of $100,000,000 of income.
  2. Capital Repatriation Decree, since the decree that was issued in this regard was active until October 19th, 2017.

INCOME TAX RATE

  1. Lower the maximum rate for individuals from 35% to 30%, as it was until December 31st, 2013.
  2. Allow the 10% withholding tax for dividends paid to individuals residing in Mexico to be creditable and not be considered as a final payment, as it is now in the Income Tax Law.

ADMINISTRATIVE SIMPLIFICATION

  1. Simplify the emission of Internet Digital Invoice (CFDI), since its implementation has been very complex today.

COMBAT THE TAX EVASION

  1. Exercise the tax acts permitted by the Law allows to all those individual and legal entities, who having the obligation to pay taxes and are not doing so, just like it is provided by the tax laws. From the above, it follows that there are many opportunities in Mexico to maintain existing investments and attract new investors, both residents of Mexico and other countries.