A Presidential Decree with the intention of encouraging the repatriation of funds kept abroad by Mexican taxpayers was published in the Official Gazette of the Federation on 18 January 2017.
Open until mid-2017, participants of the new amnesty program would be obliged to comply with specific requirements including an eight percent tax on all repatriated funds as well as maintain the repatriated funds invested in Mexico for at least two years.
According to the decree, during the six months following 19 January 2017, Mexican resident taxpayers and permanent establishments in Mexico of non-Mexican residents who obtained income that has been kept abroad until 31 December 2016 may choose to pay the income tax applicable on such income by applying an eight percent flat rate on all funds repatriated to Mexico.
The decree’s benefits can only be applied to income and investments repatriated to Mexico during the six month period provided in the decree as long as such funds remain invested in Mexico for a minimum of two years.
Income is only deemed invested in Mexico if the funds are devoted to any of the following:
- Acquisition of fixed assets that are deductible for income tax purposes and acquisitions of land or constructions located in Mexico that are used in the taxpayer’s income generating activities
- Research and development expenses related to the taxpayer’s own projects
- Payments of liabilities contracted with independent parties and investments provided that such payments and investments are made through Mexican banks or brokerage houses
Items of income obtained by taxpayers that are under audit or review by tax authorities or for which a taxpayer initiated any jurisdictional or administrative legal proceeding, income originated by illegal activity, and items of income that generated a deduction to Mexican tax residents or non-residents with a permanent establishment in Mexico are not applicable.
The Revenue Service Administration may issue rules for the application and interpretation of the decree.