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Roberto del Toro |
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Karina Perez |
Given the situation of the global economy, the Mexican tax authorities issued on March 27 2009, a new capital repatriation decree which repeals the two former decrees (1995 and 2005 decrees) to grant tax benefits with respect to investments repatriated to Mexico.
The new decree is applicable to income derived from capital kept abroad before January 1 2009 repatriated and invested back to Mexico (through a deposit in a financial institution), provided that such income is taxable for corporations, individuals or under the preferred tax regimes, pursuant to the Mexican income tax law and no deduction has been claimed over the repatriated capital.
The repatriated capital shall be and remain invested in Mexico for at least two years from the repatriation date or date of the deposit in a financial institution.
Pursuant to the decree, a 4% or 7% income tax rate shall be applied by individuals and corporations, respectively, to the gross amount of the repatriated proceeds. Such tax shall be paid within 15 days following the repatriation date through stamps available from the financial institutions. These Institutions shall provide global information to the tax authorities regarding the number of stamps sold, on a monthly and under a no-name basis.
However, corporations shall file a notice of the repatriation within 15 days following the income tax payment to disclose required information regarding the repatriation, before the Mexican tax authorities.
The decree provides that the taxable income shall be considered in the profit sharing basis and that the resulting tax shall not be creditable against the Mexican flat tax. The decree also clarifies that no return, credit or compensation shall arise from its application.
Tax authorities will publish additional guidance for the application of the decree through administrative regulations.
Roberto del Toro (roberto.del.toro@mx.pwc.com) & Karina Perez (karina.perez.delgadillo@mx.pwc.com), Mexico City
