Automotive manufacturing facility hampered by pressures on fiscal stimulus: KPMG

Monterrey, NL. There are pillars that attract Foreign Direct Investment (FDI) from manufacturing to New Lion and to the country, due to its geographical location, the cost of labor, logistics infrastructure and social stability; but there is pressure from the federation on the zero rate in exports considering it as a fiscal stimulus and the program is questioned at the international level IMMEX when perceiving it as an undue benefit, highlighted Mario A. Hernández, Lead partner of the IMMEX segment, in KPMG in Mexico.

The ratification of T-MEC generated certainty for investors of USA and Canada, as well as other countries that locate Mexico as a manufacturing center with two objectives, to reach the market of North America and generate internal growth, taking advantage of the increase in young people who enter the labor market and are consumers.

He asserted that there have been no new taxes in recent years and it is expected that in the remainder of the six-year term new taxes or the current ones are increased, and another benefit is the network of commercial treaties of Mexico that it has celebrated with many countries, to avoid double taxation.

However, there is pressure from the federal government, on the use of the zero rate in exports of goods and services, and compliance with the rules of transfer prices of profits to Mexico.

“We are seeing a lot of pressure from the federal government Regarding the zero rate in exports, the government mistakenly considers that it is a fiscal stimulus, when is a export rate already established ”.

“The federation also considers that the companies that carry out manufacturing operations and export finished products, improperly request the return of the Value Added Tax (VAT) who pay in their daily operations and are questioning this rate; for now in the 2022 Economy Package it continues to be maintained, (we believe that) a change would be detrimental to manufacturing operations, ”he emphasized.


All of the above, he concluded, creates a difficulty in starting new operations in Mexico, for the delay to obtain a IMMEX and the certification of VAT, whose processing can take almost a year.

“It is very difficult to start manufacturing operations in Mexico and establish new companies, it takes a long time to grant permits, which makes their establishment complicated, another change we saw was the zero rate elimination for temporary imports of merchandise as of 2014 ”.

Although companies can continue to pay the VAT with a tax credit, which puts companies at a disadvantage manufacturing operations that are made in other countries.

He warned that more and more countries of Central America and South America, Eastern Europe and Vietnam, which represent direct competition for the manufacturing in Mexico, where all these countries are seeking to establish similar models to attract foreign investment, in their territories.

What’s more, “Mexico has a very high corporate tax rate (30%), compared to the rest of the countries of the OECD, whose rate is 17 percent “, stressed the specialist, in the panel on the future of the automotive industry, at the event Automotive Supplier, organized by the Nuevo León Automotive Cluster (CLAUT).


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