May 20, 2019 / 2:54 PM / a month ago

No more 'white collar theft': Mexico orders end to corporate tax breaks

Mexico's President Andres Manuel Lopez Obrador speaks to the media during a news conference at the National Palace in Mexico City, Mexico May 1, 2019. Press Office Andres Manuel Lopez Obrador/Handout via REUTERS

MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador said on Monday his government will order an end to tax forgiveness for the country’s largest companies, saying $20 billion in exemptions given by his predecessors was akin to theft by gangsters.

Of the firms that benefited from tax breaks totaling more than 400 billion pesos, 58 are listed on the stock exchange, said Mexico’s tax chief Margarita Rios-Farjat at the president’s regular news conference.

Nearly a third of the companies listed on the benchmark S&P/BMV IPC received tax breaks, she said.

Lopez Obrador did not reveal the identity of the companies.

“It’s like white collar fuel theft,” he said, referring to the widespread stealing of gasoline from pipelines by organized crime that his government has tried to crack down on.

“This mechanism has been abused and it will be eliminated,” Lopez Obrador added.

In a statement, Alfonso Ramirez Cuellar, a member of Lopez Obrador’s leftist National Regeneration Movement (MORENA) who chairs the budget committee in the lower house of Congress, identified major local banks as beneficiaries of tax breaks.

According to Ramirez, publicly available data from 2017 showed that Citigroup’s Mexican unit, which is known as Citibanamex, had 53.4 million pesos of tax written off, while its Mexican peer Grupo Financiero Banorte enjoyed a tax break of 30.1 million pesos.

Citibanamex and Banorte did not immediately reply to requests for comment.

Reporting by Ana Isabel Martinez and Diego Ore; Additional reporting by Stefanie Eschenbacher; Editing by Jeffrey Benkoe and James Dalgleish

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