Mexico: New Tax Reform Plans to Re-establish Reduced VAT Rate at the Border

The Mexican Congress is proposing to re-establish a reduced VAT rate in the border states of Baja California, Baja California Sur, Quintana Roo, and in the municipalities of Caborca and Cananea of the state of Sonora. The new proposed rate for those regions would be 8%, applicable to transactions of goods or services made by inhabitants of any of the above regions. It is worth mentioning that until 2014, the Mexican government applied a reduced rate of 11% in the same regions. 

The current project is being considered at the Mexican Senate and if approved at the Chamber of Representatives as it is designed, the new regime would become effective immediately. For further detail, please see: http://www.pan.senado.gob.mx/2018/09/del-sen-ismael-garcia-cabeza-de-vaca-del-grupo-parlamentario-del-pan-con-proyecto-de-decreto-por-el-que-se-reforma-y-adiciona-la-ley-del-impuesto-al-valor-agregado/.

Author

Ramon Frias

Ramon is a Tax Counsel on the Regulatory Analysis team at Sovos. He is licensed to practice law in the Dominican Republic and is a member of the Dominican Bar Association. He has a Certificate Degree from Harvard University as well as a J.D. from the Universidad Autonoma de Santo Domingo. Ramon has written a number of essays about tax administration and has won the first prize in the international essays contest sponsored by the Inter American Center of Tax Administrations (CIAT). Prior to joining Sovos, Ramon worked for more than 10 years in the Department of Revenue of the Dominican Republic where he served as Deputy Director. He is proficient in French and Spanish.
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