MEXICO CITY (Reuters) -Mexico’s government does not envisage tax increases in an upcoming fiscal reform plan, but will consider closing loopholes, improving taxing efficiency and expanding the taxable base, Deputy Finance Minister Gabriel Yorio said on Tuesday.
“In 2021, we find ourselves in a situation where Mexico has no need to increase tax rates,” Yorio told Reuters in an interview.
“We’re not going to increase tax rates. We’re probably going to make administrative improvements, expand the tax base and close the fiscal gaps and obviously, analyze the proposals that may come from the different economic actors, including the new Congress,” said Yorio.
Mexico is finalizing its fiscal reform, but the plan is still in the works and details are being ironed out.
President Andres Manuel Lopez Obrador aims to increase Mexico’s tax take to 15% of gross domestic product (GDP), from around 14.2% of GDP currently, Yorio said.
With the aim of boosting the lowest tax take in the Organisation for Economic Co-operation and Development, Lopez Obrador’s administration has made efforts to increase tax collection and crack down on evasion to squeeze more revenue out of businesses.
The International Monetary Fund (IMF) last year urged Mexico to enact a tax reform once a recovery from the COVID-19 pandemic took hold to boost the economy and support spending in the medium-term.
G20 countries, including Mexico, will consider a broader accord next month in Venice on the heels of a historic G7 deal reached at the weekend that aims to squeeze more money out of multinational companies and reduce incentives for low-tax offshore havens.
“We’re going to have to obviously modify some laws, rules and be in line with the agreements reached at the G20,” said Yorio, adding the changes could mean increased tax revenues in Mexico.
The government will need to negotiate the reform with lawmakers, after Mexicans voted in a new lower house of Congress on Sunday.
“Some new members of Congress could put environmental or sustainability-related taxes on the table and these new concepts will obviously have to be analyzed to see if they are included or not,” Yorio said.
He added that the planned fiscal reform plan will likely not include new taxes, with the exception of the minimum global corporate tax rate agreed at the G7, and which will be discussed at the G20.
Reporting by Anthony Esposito; Editing by Tom Hogue and Raju Gopalakrishnan