Mexico stands alone in its tax relief response to COVID-19
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Mexico stands alone in its tax relief response to COVID-19

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Mauricio Martínez D´Meza Violante and Ricardo Gonzales Orta of Deloitte Mexico discuss why the Mexican government has opted to take an alternative approach from its international counterparts, in relation to its assistance to businesses affected by the coronavirus outbreak.

The devastating economic and financial consequences of the coronavirus pandemic have spurred governments worldwide to take aggressive action to provide financial support and tax relief to businesses and individuals. Authorities have actively moved to introduce measures to sustain their economies and stimulate investment. 

In stark contrast, despite there being over 75,000 cases of COVID-19 in Mexico as at the date of writing, the federal government has resolved not to introduce any broad-based financial relief, tax reliefs, or stimulus measures. Three propositions seem to underlie the reluctance of President López Obrador and his administration to introduce any general stimulus package: 

  • The belief that a stimulus package would likely benefit only a select segment of the taxpayer population;

  • A perception that such a measure is akin to a tax amnesty, which is antithetical to the government’s anti-corruption stance, given the perceived abuses to which past tax amnesties were subject; and

  • A general antipathy towards the policies of former President Felipe Calderón.

Lessons to learn from the swine flu pandemic

There is clear precedent for Mexico to enact economic stimulus measures in response to a global crisis. During the worldwide H1N1 flu (or swine flu) outbreak in 2009, the Calderón administration released an aggressive stimulus package to help the country recover from the devastating disruption to the economy following the institution of sweeping public health and safety measures and the shut-down of non-essential businesses to curb the further spread of the flu. 

The stimulus package included income tax reductions and exemptions, reductions in the social security rates for employees, postponement of the deadlines for filing the annual tax return and monthly advance tax payments, preferential financing, and targeted tax benefits. All the measures gave taxpayers across the board much-needed breathing room and generally achieved its objective to help boost the economy.

According to the current administration, the main problems with the 2009 tax stimulus package were that the package was an initiative of the Calderón administration (the singular focus of Obrador’s criticisms) and that it served to benefit only large companies and sophisticated taxpayers. The president maintains that the 2009 measures are genesis of Mexico’s current economic troubles.

Past administrations have also introduced tax amnesties—either by way of executive decrees or legislation—but these programmes were not responses to emergencies or disasters. Instead, they functioned as a tool to facilitate short-term tax collection, recoup lost tax revenue, and/or to allow taxpayers to ‘regularise’ their tax compliance obligations and eliminate outstanding tax debts. It is important to note that both Calderón´s predecessor (Vicente Fox), as well as his successor (Enrique Peña), introduced tax amnesties but neither had to contend with a worldwide crisis such as COVID-19 or H1N1.

A valid argument can be made that tax amnesties only benefit a small number of taxpayers, and mainly those who are non-compliant. Indeed, the Mexican Congress, controlled by Obrador’s ruling party (MORENA), has gone so far to enact a constitutional amendment on March 6 2020 to prohibit the granting of tax debt forgiveness or tax exemptions unless they are specifically provided for by law.

That being said, there clearly is a difference between a tax amnesty and an emergency tax stimulus package, in particular where the latter is a response to a general crisis. Nevertheless, Obrador believes that neither measure is appropriate given the pressing need for tax revenue, arguing that both represent a departure from strict compliance with the letter of the law. He has emphatically stated that no tax amnesty or tax benefits will be granted at the federal level (with one exception—individuals were granted a one-month extension to file their annual tax returns).

Although Obrador has declined to introduce any broad-based tax or financial relief measures in response to the coronavirus, he has been the architect of several programmes to provide assistance to the poor, the elderly, and unemployed youth. Ironically, none of these groups are taxpayers, and the programmes are funded by the collection of federal taxes.

The federal government also has introduced temporary financial relief for small taxpayers, such as an automatic one-time loan of US $1,000 to employers that did not lay off any employees.  However, this measure has been estimated by some as allowing an employer to cover the payroll of only three to four minimum wage workers for a month.

It is also worth noting that Mexico’s Federal Fiscal Code allows for a reduction of a company´s monthly advance federal income tax payments (i.e., payments calculated based on the revenue for the month and applying a profit factor based on the tax result of the previous year) for the second half of each year. However, the government did not grant relief for the payments covering March through May and it is by no means certain that any reduction will be given for the June-December period. 

Responses of the state governments

In contrast to the federal government’s approach, many of the Mexican states have introduced tax stimulus measures covering one or more local taxes. At least eight states—Aguascalientes, Baja California Sur, Colima, Durango, Mexico City, Morelos, Quintana Roo, and Sonora—have extended the deadline for paying local taxes (e.g., payroll tax, lodging and hospitality taxes, etc.). Additionally, some of these states, as well as Hidaldo, Mexico State, and Zacatecas have granted tax exemptions and reductions of local taxes. While these initiatives will provide some relief to taxpayers at all levels, they will not alleviate the greatest tax burden—the federal income tax. 


Early projections are that the coronavirus will cause the worst recession in Mexico since 1930. It would seem to be readily apparent that any form of federal tax relief would help to soften the blow to all Mexican taxpayers, and it is unfortunate that the federal government has focused only on supporting non-taxpayers and has not taken steps to assist the very taxpayers that effectively are financing such support. 

The efforts of the state governments in the form of tax and financial relief granted to their tax base are laudable, but it is by no means clear that these efforts will be sufficient to prevent the imminent, permanent closure of many Mexican businesses, regardless of their size.

Mauricio Martínez D´Meza Violante

T: +52 55 5080 7040


Ricardo Gonzales Orta

T: +52 55 50 80 70 23


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