Corporate Tax

Mexico ought to generate web income from corporate tax reform, finance minister says

Venice, July 11th (Reuters) – Mexico’s Finance Minister Arturo Herrera told Reuters that the global deal to revise the taxation of multinational corporations should easily be approved by the Mexican Congress as it will expand the country’s revenue base, but deliberations will likely wait until September 2022.

Herrera said in an interview on the sidelines of the G20 finance chiefs meeting this weekend in Venice, Italy that the OECD tax treaty is a “no problem” for Mexico.

The deal, which sets a minimum global corporate tax of at least 15% and allows the largest multinationals to be taxed in countries where they sell products and services, was officially approved by G20 ministers on Saturday.

“I think this should go smoothly for us because there will be a net inflow of taxes,” Herrera said of the legislature’s approval. “And these are taxes related to economic activity that are levied in the country. But our base is currently suffering from profit shifting. “

A final deal on the global minimum tax is expected in October, which would miss Mexico’s annual change to its tax laws by a month. That means the Mexican Congress would likely ratify it in September 2022, Herrera said.

U.S. Treasury Secretary Janet Yellen said Sunday that the final details of the redistribution of taxation rights for large corporations, including tech giants like Google, Facebook, and, could take longer than the global minimum tax, possibly until spring 2022.

If the switch is not delayed further, Mexico could still meet a September 2022 timeframe.

The G20 leaders discussed ways to improve access to vaccines, but did not announce any major new commitments in Venice. . They also expressed concern about the spread of new COVID-19 variants, which are a setback for the broad economic recovery.

Herrera said there may have to be a new multilateral option for developing countries to get more vaccines alongside the World Health Organization co-run COVAX vaccine distribution system, which he described as a disappointment.

Of the 254 million doses of vaccine that Mexico procured, more than enough to vaccinate Mexico’s 126 million people, the majority was provided through COVAX. Herrera had high hopes for a smooth delivery, but up until a month ago “the vast majority of vaccines received were non-COVAX vaccines,” he said, adding that these came direct from AstraZeneca, Pfizer-BioNTech, CanSino, and Sputnik Johnson & Johnson.

“COVAX is a great idea, but it was poorly implemented,” he added.

Herrera, who is about to leave Mexico’s Treasury Department to become the country’s central bank chief, also told Reuters that he believes inflation is under control in Mexico without sustained price hikes.

“Most of the information suggests that some of the optics we’re seeing right now are at least temporary or related to the pandemic,” he said, referring to supply bottlenecks and shifts in demand that are driving prices for certain goods such as laptop computers.

“We have to watch it, but we are reasonably optimistic that most price movements will be temporary.” (Reporting by David Lawder)

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