I read this recently and am sharing now…I don’t have all the legal information but maybe this could be helpful. Seek a legal professional to assist you. (Thank you Jim Ringquist at Sonoran Resorts)
AMLO’s promises for 8% IVA, 20% Income Tax, and doubling the minimum wage:
President Andrés Manuel López Obrador made a promise during his campaign that he would lower the IVA in the border zone to 8%, lower the income tax rate to 20% and double the minimum wage. He should have added a “but” or an “except” to that statement. On December 31, 2018 a disappointing effort was made to complete this campaign promise.
There has been much discussion about this Decree; a lot of people are confused and so a prominent Mexican Tax Attorney studied the Decree, translated it to English and also reviewed the new minimum wages for 2019. Here are his opinions:
DECREE for fiscal incentives in the northern border region.
On December 31, 2018 the President Lopez Obrador (AMLO) published the Decree for fiscal Incentives in the Northern Border Region.
IVA – Value Added Tax
The Decree DOES NOT lower the IVA (Value added tax) to 8%. The Decree offers a “fiscal incentive” to provide a “fiscal credit” for companies that sell tangible products. Those persons or companies can apply during January 2019 for this program with SAT and they can then charge 8% IVA and apply a fiscal credit for the remaining 8%. Stores that are now advertising that the IVA is lowered to 8% are incorrect. The program is not automatic, vendors must apply for it and can opt not to.
The program only applies to persons or companies selling “tangible products” only. It does not apply importations, Real Estate, intangible products, digital content, professional services and internet sales. Persons and companies must have at least 18 months in the region with 90% of their income in the border region.
ISR – Income Tax 20%
To whom does it apply?
Individuals or companies with business activity (actividad empresarial) in the northern border region.
The requirements are at least 18 months in the border region before the Decree was published. It applies to companies with income of 90% in the border zone. Applicants must apply for the program by the end of March 2019 – SAT will respond within 30 days.
Excluded from this program are: Maquiladoras, Financial institutions, Fideicomisos, Real Estate, production cooperatives, intangible products, internet commerce, outsourcings, those with problems with SAT, companies in bankruptcy.
Doubling the Minimum Wage
On December 26, the new minimum wages were published by CONASAMI (Consejo de Representantes de la Comisión Nacional de los Salarios Mínimos) – The Council of Representatives of the National Commission of Minimum wages in the DOF and they took effect January 1, 2019. The Decree divides the country into 2 geographical regions, the northern border zone and everyone else.
In the border zone, the general minimum wage and the minimum wage for 59 professions is set at $176.72 per day in the northern border zone which consists of the following:
BAJA CALIFORNIA – Ensenada, Playas de Rosarito, Mexicali, Tecate and Tijuana;
SONORA – San Luis Río Colorado, Puerto Peñasco, General Plutarco Elías Calles, Caborca, Altar, Sáric, Nogales, Santa Cruz, Cananea, Naco and Agua Prieta;
CHIHUAHUA – Janos, Ascensión, Juárez, Práxedis G. Guerrero, Guadalupe, Coyame del Sotol, Ojinaga and Manuel Benavides;
COAHUILA – Ocampo, Acuña, Zaragoza, Jiménez, Piedras Negras, Nava, Guerrero and Hidalgo; NUEVO LEON – Anahuac;
TAMAULIPAS – Nuevo Laredo, Guerrero, Mier, Miguel Alemán, Camargo, Gustavo Díaz Ordaz, Reynosa, Río Bravo, Valle Hermoso and Matamoros.
How does this effect your employees?
All of your employees must be registered in IMSS (Social Security) with at least $176.72 pesos per day if you are in the northern border zone. The new Minimum wages are different in the rest of the country.
“Mexican Beach Bum” (Robin Miller) Realtor® is the Designated Broker for Mexico Real Estate and Document Services in the beautiful resort city of Puerto Peñasco-Rocky Point, Mexico, where the desert meets the ocean. Just 210 miles from Phoenix or Tucson and where income producing properties start at $75,000 and homes in town start at $30,000.
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