From Mexico: Tax Incentive on Repatriation of Funds
Gil Lara Morales - Andersen Tax & Legal, Mexico, a Member Firm of Andersen Global
To promote the repatriation of funds, a flat 8% Income Tax payment will be allowed on unreported funds generated through direct or indirect investments maintained abroad as of December 31, 2016.
Mexican individuals, entities and permanent establishments are allowed to take the flat 8% Income Tax benefit instead of paying the standard Income Tax rate (30% to companies/PE and up to 35% in case of individuals). The tax return on repatriated funds must be filed no later than July 19, 2017 and the deadline to pay the tax is August 3, 2017.
If the benefit is taken, taxpayers are obligated to maintain the repatriated funds invested in Mexico in specific goods or activities (such as Fixed Assets or R&D projects located in Mexico) for at least two years.
This benefit is not applicable if funds are linked to a tax deduction already taken in Mexico or connected to illegal activities.
For purposes of promoting investments in Mexico, taxpayers with an annual income up to $100 million pesos (approx. $5 million USD) will be allowed to take an accelerated depreciation on the investments made during the 2017 and 2018 tax years. This benefit could be applied as well by newly incorporated entities as long as the estimated income on its first operative year does not exceed the provided income limit.
Please contact Gil Lara Morales at Andersen Tax & Legal in Mexico for additional information.