Mexico’s new leftist President Andres Manuel Lopez Obrador, decreed on Monday January 7, 2019, tax cuts for northern states that he says will help power economic growth and deter migration to the United States.

Last Saturday at an event in Monterrey in the northern state of Nuevo Leon, Lopez Obrador said the minimum wage in the northern strip of municipalities would rise to $177 pesos (approximately $9.00 USD), nearly double the national level, starting Jan. 1, and that fuel prices would be set on a par with U.S. prices.

An executive order in the government’s official gazette granted lower rates for both value-added and income taxes in 40 municipalities bordering the United States, an area that has the spotlight over U.S. President Donald Trump’s policies to deter inmigrants, including building a wall.

 

The #ZonaLibre Plan established in the northern border of Mexico encompasses not only a tax reduction, but also a 100% raise of the minimum wage and the establishment of a similar price of fossil fuels (such as gasolines, gas and electricity) on both sides of the border

 

The proposal to reduce the Income Tax (ISR) to 20% and the Value Added Tax (VAT) to 8% in the northern border of Mexico, could cause companies to change their headquarters to this region to pay a lower bracket and, therefore, the resources that the states receive through the General Branch 28 Participations would decrease, indicated experts in fiscal policy.

Mexico’s tax breaks begin now and this is big news for Mexican importers, and U.S. shippers that have clients in Mexico.

Coparmex a national chamber of business owners, welcomed the decree in a statement as a “judicious” measure that could spur investment in the region.

President AMLO signs the decree for the northern border region

 

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