Mexico Business Update - 21 oct 2013


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Mexico Business Update - 21 oct 2013

  1. 1. Mexico Business Update 21 October 2013 Deputies approve tax reform proposal After a long and heated debate, the Chamber of Deputies approved in general the tax reform proposal, with 317 votes in favor and 164 against. The details of the reform, however, are not final — there remain 109 “reserved” articles that were to be voted on individually. Under the reform, sugary drinks would be taxed at an additional rate of 1 peso a liter, junk food would get a 5 percent tax increase and value added tax (VAT) in border states would rise from 11 percent to 16 percent, bringing it into line with the rest of the country. Profits made on the Mexican Stock Exchange would for the first time be taxed, and those earning more than 3 million pesos ($235,000) a year would see their income tax rise from 30 to 35 percent. Tax adjustments will impact inflation An inflationary impact due to the adjustment in VAT and other taxes is inevitable since normally companies transfer that adjustment to end consumers. It is very likely that the most part of this adjustment will be reflected in inflation in 2014. According to an analysis of Rafel Camarena, analyst of Santander, the approval of the tax reform by the Chamber of Deputies will increase inflation by 0.45 points next year. Mexico mining taxes to hit investment and jobs, industry bodies warn The Nationla Mining Association warned that higher taxes planned specifically for Mexico's mining sector will result in a 60% reduction in investment and job losses, and will deter foreign investment in the short term. PAN to fight tax reform in Senate The National Action Party (PAN) will fight “the mother of all battles” in the Senate to block the tax reform that passed the Chamber of Deputies last Thursday. The bill is said to negatively affect most Mexicans due to regressive taxes, citing a Value Added Tax (VAT) hike in Mexico’s northern border states, which currently pay a lower rate, and the imposition of a tax on public transportation. San Miguel wins top city award Roaring enthusiasm hit little San Miguel de Allende last Wednesday after prestigious Condé Nast Traveler magazine’s readers declared the town number one in its annual “Top cities of the world” ranking. It is the first Mexican tourist destination to win such an award, beating more famous destinations like Paris, Barcelona, Sydney and Kyoto. The magazine, which caters to a well-heeled clientele, received nearly 80,000 votes for it’s Readers’ 25 Cities in the World poll. Chiapas supports traditional artisans The Chiapas state government announced new subsidies for traditional artisans on Saturday. At the 2013 Fray Bartolomé de Las Casas State Handicraft Competition, held in Chiapa de Corzo, Gov. Manuel Velasco Coello announced 550,000 pesos ($43,000) in subsidies for municipalities across the state. Velasco Coello said that this stimulus package aims to provide incentives for Chiapas’ artisans and recognize their hard work. "Window is narrowing" for sustainable and inclusive growth in LatAm - OECD head Latin America can still achieve sustainable and inclusive growth but the "window is narrowing," said OECD's secretary general José Angel Gurría at an Ibero-American summit in Panama City. After a decade of relatively strong growth, Latin America is facing head winds associated with declining trade, a moderation in commodity prices and increasing uncertainty over external financial conditions, according to the latest Latin American Economic Outlook produced by the OECD, the UN Economic Commission for Latin America and the Caribbean (Eclac) and Latin American development bank CAF. Mexico braces itself for Category 3 Hurricane Raymond Hurricane Raymond, the strongest hurricane of the season so far, is expected to make landfall along Mexico's Pacific coast by October 22, according to the national water commission