• Service: Tax, Global Mobility Services, International Tax
  • Type: Regulatory update
  • Date: 3/5/2014

Mexico - Government, taxpayers reach agreement on “tax certainty” 

March 5:  The 2014 tax reform provisions brought significant changes to the tax system in Mexico—changes affecting both business and individual taxpayers. In response, taxpayers filed for injunctive relief* against certain measures under the recently enacted tax provisions.

*Under Mexico’s Constitution, the general rule allows taxpayers to challenge the constitutionality of tax law amendments by seeking injunctive relief against the effect of the challenged provisions.

Over recent weeks, there was speculation as to whether the Mexican government (executive branch) and different business organizations would reach an agreement for “tax certainty” concerning the tax reform provisions.

A pacto fiscal (tax certainty agreement) was unveiled in late February 2014, and the tax agreement is to be effective until 30 November 2018.

Tax certainty agreement

The tax certainty agreement is a commitment of Mexico’s federal executive branch, together with the Mexican State governments, to strengthen “economic certainty,” and to encourage investment and economic growth because of the stability of the tax rules.

With this tax certainty agreement, the Mexican government agreed:

  • To exercise the efficient and transparent spending of public resources
  • Not to propose any new taxes, not to amend the energy law, not to propose increases to the tax rates or modifications to benefits and tax exemptions granted to taxpayers (unless there would be changing economic situations requiring action)

Mexico’s federal government also expressed its commitment to address tax evasion and to promote the economy.

KPMG observation

With the tax certainty agreement, the view is that the agreed-to measures will foster tax stability and in turn foster economic growth. In turn, this will allow for effective financial planning in Mexico, given the tax certainty provided to taxpayers under the agreement. These measures will help taxpayers facilitate their business decision-making and planning; the measures will provide individual taxpayers opportunities for proper planning of their expenses and savings.

An agreement between the federal government and the various economic agents was viewed as desirable by: (1) providing stability to the Mexican tax system; (2) allowing for review the issues that cause taxpayers to seek injunctive relief; and (3) promoting sources of tax revenue that are consistent with international trends (including indirect taxes in Mexico that, apparently will fall to the next government).

For more information, contact a tax professional with KPMG:

Jose Manuel Ramirez

+1 212 872 6541

Catherine Thibault

+52 55 5246 8474

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