Roberto Mendoza: The post-pandemic Mexican tax regime

Roberto MendozaRoberto Mendoza Source: courtesy

A little less than a year after the pandemic was declared (March 11, 2020), there are already records of hundreds of millions of infected people, in more than 250 countries and without a doubt a similar disruptive and unprecedented socioeconomic phenomenon having been triggered, It has been a mandatory task of all nations to plan, evaluate and measure the economic impact that confinement has brought and will bring, as well as the possible modifications to your policy economic fiscal, in order to keep afloat the business sector of your country.

Under a strictly fiscal-financial; It is a common practice at a global level, it is that every time there is a phenomenon of any kind that prevents the normal activation of the local economy (for example, meteorological phenomena, epidemics, etc.), the country’s tax system resorts to the promotion of various stimuli that prevent unemployment or the decline of certain key sectors, and even others that allow commercial reactivation. Mexico It has stood out for it, but not in the sense that we imagine it; We occupy the not honorable 20th place within the G20 member countries, having granted just under 1% of GDP in these areas, when the average of the OECD countries was 6%.

Contrary to this trend, it seems that we are going through an alternate reality, where far from seeking to elevate competitiveness indices of our economy, perhaps through the granting of benefits that accelerate the reactivation and the promotion of employment, various reform initiatives are being promoted that at least on paper, could clearly be counterproductive.

In a country where historically we have suffered from a tax culture and there is also a significant percentage of informal economy, it is even obvious to confirm that we are one of the nations with the lower collection rates; thus, in effect, the objective of the authorities in recent years has been aimed at reinforcing control tasks. This has been demonstrated, since Mexico has conveniently decided to be an early adopter of the OECD recommendations, but coincidentally in those that are aligned to promote a tax collection with more demanding rules (disclosure of reportable schemes) and restrictive (certain limitations on deductions ) and not so in those that cause a better attraction for investors (reduce income tax rate or standardize VAT).

The international tax competitiveness index published by the think tank Tax Foundation has placed the country in place 31 out of 36, reasons such as bureaucracy and inefficient times to comply with tax obligations, as well as painful processes to recover favorable balances, have been highlighted as negative aspects . The result of this publication will not bode well for Mexico in the following years, if during this year the reform that seeks to prohibit subcontracting ends, it is enough to point out that at least 24% of the employees registered with the IMSS are under this figure, it will be necessary to see how it ends, but without a doubt it could trigger severe consequences for the economy in general, but it could be fatal for some sectors.

The operating circle of an efficient fiscal policy, although extremely complex in its formula, always ends up following fsimple actors; Without economic activity in the country, it will be necessary to consider that there will be no business profits and therefore there will be no income tax to be collected. Similarly, if there is no commercial activity and the consumer does not go out on the street or buy online due to lack of resources, there will be no VAT or IEPS to collect.

Utopian or not, but it will be crucial that in the short term some temporary stimulus mechanisms begin to take shape that allow businesses to stay afloat, and why not, design a tax reform that allows in effect to raise compliance and compliance rates. competitiveness and that in turn provide certainty to all businesses of all sizes.

The author is Professor of the Academic Program of the Bachelor of Accounting and Finance at the Business School at the University of Monterrey. He is a Public Accountant graduated from UDEM and a Master in Tax Law from the UANL Law School. He has extensive experience in national and international tax consulting.

This is an opinion column. The expressions used here are the sole responsibility of the person signing them and do not necessarily reflect the editorial position of El Financiero.