The majority of the Double Tax Treaties (DTTs) entered into by Mexico are covered by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) (the MLI), except for certain exceptions, such as Indonesia, which had not covered as of today the tax convention with Mexico as covered under the MLI, and the United States of America, which decided not to join the MLI. The precise date the conventions covered by the MLI will be effective for Mexican tax purposes is yet unknown, as the Mexican Congress must conclude the approval process of the MLI.
On 30 October 2019, the Mexican Congress approved the amendments to the tax Laws for Fiscal Year 2020 which final text was published in the Mexican official gazette on December 9, 2019 including various amendments to the following laws: The Income Tax Law, the Value Added Tax Law, the Excise Tax Law (IEPS), the Federal Rights Law, and the Federal Fiscal Code (together, “the 2020 Tax Reform”). Most of the 2020 Tax Reform introduced changes will enter into effect as from January 1, 2020, however, there are certain provisions for which a later period of application was granted (reportable schemes, digital tax, among others).
In general terms, the 2020 and 2021 Mexican Tax Reforms were meant to incorporate fundamentals of the OECD Base Erosion and Profit Shifting (BEPS) initiative. The economic context in which these Tax Reforms were legislated assumes GDP growth of between 1.5% and 2.5%, and an increase in tax collection without the creation of new taxes, although the current expectations for economic growth have been affected due to the ongoing SARS-CoV-2 Pandemic.