Macro Analysis / Mexico

Mexico: Lower House approves 2021 Revenue Law – now to the Senate

  • The Lower House finalised the approval process of the 2021 Revenue Law, along other fiscal-related legislation
  • While macroeconomic assumptions were unchanged, other adjustments were made, driving revenues slightly down
  • In this respect, total income is now expected at $6,262.7 billion (US$297.5 billion)
Mexico: Lower House approves 2021 Revenue Law – now to the Senate
  • The Lower House of Congress has finalized the approval process of the 2021 Revenue Law, along with other additional fiscal-related legislation 

  • The process was delayed relative to the deadline of October 20th established in the Fiscal Responsibility Law. Nevertheless, by freezing the ‘legislative clock’, the limit has been technically fulfilled 

  • Macroeconomic assumptions used to make up the Revenue Law were left unchanged relative to those presented in the Economic Policy Criteria document as part of the 2021 Budget 

  • Within the Federal Rights Law (Ley Federal de Derechos, in Spanish), increases in payments proposed by the MoF for the use of the radio spectrum were adjusted lower. For example, the proposed increase for the 800Mhz band was originally set at 56.2%, but the approved figure was only 3.5% 

  • In addition, the proposal of a surcharge as part of the excise tax on fuels –which would have set a floor on the price in real terms– was discarded. Meanwhile, an increase in excise taxes on sugary drinks and alcoholic beverages, among other goods, was also ruled out 

  • Digital platforms will be forced to retain 100% of the VAT collected when they provide intermediation services to foreign companies. A flat tax rate was also established to digital services such as Uber, Airbnb and Amazon, among others, as opposed to the ranges proposed originally 

  • The proposal that would have removed VAT on women’s hygiene products was also not approved 

  • Additional measures were introduced to aid tax-collection efforts by Mexico’s Tax Administration Service (SAT by its acronym in Spanish), including the use of technological instruments to collect images and/or related files 

  • The provision that would have allowed the MoF to access resources from the Health for Welfare trust fund was eliminated–also known as the Catastrophic Spending Fund from the National Health and Welfare Institute (INSABI, in Spanish)–, currently holding about $33 billion (US$1.6 billion). Nevertheless, members of Morena’s legislative group mentioned they will work to modify the General Health Law to try to add back this amount, arguing that it will be used to purchase the COVID-19 vaccine once it is available 

  • With these adjustments, the total amount in the Revenue Law stands now at $6,262.7 billion (US$297.5 billion), below the $6,295.7 billion (US$299.0 billion) proposed by the MoF. We should recall that this amount also includes ‘revenue’ from additional debt, matching total spending 

  • With the end of this process, this legislation will be sent to the Senate for further discussion and voting, remembering that they have until October 31st to approve it

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