May 6, 2013 / 11:10 AM / 6 years ago

Factbox: Key facts about Mexico's tax system

MEXICO CITY (Reuters) - Mexico’s new government has promised a comprehensive review of its tax system, to be announced in the second half of 2013 along with an overhaul of energy policy.

Here are some facts about the country’s tax system:

* Mexico received 1.3 trillion Mexican pesos ($107.5 billion) in net tax revenue in 2012, equivalent to 8.5 percent of gross domestic product (GDP) and split roughly 60/40 between income and sales taxes.

* Mexico’s highest individual tax rate of 30 percent kicks in at an annual salary equivalent to $30,288, one of the lowest thresholds in the world. That compares with $388,350 in the United States, $394,380 in Spain and $329,611 in Germany, according to a 2012 survey by accountancy firm KPMG.

* The United Nations calculates Mexico earns proportionally less revenue for each percentage point of value-added tax (VAT), nominally 16 percent, than any other country in Latin America, reflecting Mexico’s flourishing informal economy as well as tax breaks.

* Mexico’s corporate tax rate, at 30 percent, is lower than Brazil’s and Argentina’s but still high for a developing nation. Chile and Turkey charge 20 percent and Colombia 25 percent.

* The World Bank’s Ease of Doing Business survey calculates it takes a medium-sized business 337 hours per year to prepare, file and pay taxes, compared to 291 hours in Chile. Overall, Mexico ranks 107th of 185 countries in the “paying taxes” sub-index.

* Mexico charges no withholding tax on dividends. There is also no inheritance tax, no capital gains tax or stamp duty, and individuals often pay no tax on profits made from selling shares in listed companies.

* Past reforms included hiking the VAT from 10 to 15 percent in 1995, causing an uproar that some blame for the Institutional Revolutionary Party’s (PRI) 2000 election loss. The conservative National Action Party (PAN) government that then took power tried to scrap the zero VAT on food and medicine, but was blocked by the PRI, which regained power last year.

* Across the 34-nation Organization for Economic Co-operation and Development, corporate income tax raises revenues equivalent to around 3 percent of GDP, or about 10 percent of total tax revenues. Mexico is one of only two OECD countries that publish no breakdown of the source of income tax.

* Raising the tax take by 6-8 percentage points of GDP is not unprecedented: Turkey increased its tax revenue by 7 percentage points between 1995 and 2000 and Spain increased its revenue by 8 percentage points between 1970 and 1981, OECD statistics show.

($1 = 12.0933 Mexican pesos)

Compiled by Krista Hughes; Editing by Kieran Murray and Christopher Wilson

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