Mexico lures undeclared cash with tax plan, eyes $10 billion intake
Mexico said on Tuesday it will offer holders of undeclared capital abroad tax incentives to bring it home in a bid to lure some $10 billion in investment and steel itself against potential shocks from the incoming Trump administration.
Confirming a Reuters report, the government said it will offer an 8 percent repatriation tax on those funds returning to Mexico in six months, provided they go into investments including fixed assets and property for at least two years.
The 8 percent tax, which is well below Mexico’s top income tax rate of 35 percent, must be paid 15 days after money is transferred, President Enrique Pena Nieto’s office said in a statement ahead of an expected announcement later on Tuesday.
The government said the powerful CCE business lobby estimated the plan could yield $10 billion in investment.
Latin America’s second-largest economy is facing pressure from U.S. President-elect Donald Trump, who is looking to cut taxes and has threatened a hefty border levy on companies that ship Mexican-made goods to the U.S. marketplace.
Mexico’s move, which was floated last week, is in line with similar moves by both Chile and Argentina.
(Reporting by Alexandra Alper; Editing by Simon Gardner and Sandra Maler)