Skip to Content

Reduced income tax rate effective due to Mexico repatriation program

February 2, 2017 Blog 1 min read
Alejandro A. Rodriguez
The Mexican government included a new repatriation program in its presidential decree issued on January 18, 2017.

The program reflects Mexico’s efforts to encourage investment in certain strategic areas within Mexico and to incentivize Mexican companies to repatriate their liquid assets.  While not an all-inclusive list, a summary of the repatriation program is as follows:

  • Mexican entities holding funds outside Mexico can repatriate them at a reduced income tax rate.
  • The program begins January 19, 2017 and is valid for six months.
  • An 8 percent income tax rate will be applied to the gross amount of funds maintained abroad before January 1, 2017 and repatriated to Mexico.  The reduced income tax rate is a significant reduction from the Mexican corporate income tax rate of 30 percent.
  • The 8 percent income tax rate highlighted above can also be reduced through a credit for foreign income tax paid on cash that was earned.

Funds repatriated to Mexico must be reinvested in specific areas and for investment specified within the decree (i.e. acquisition of fixed assets, land, or buildings in Mexico, repayment of loans with Mexican financial institutions, or investment in research and development in Mexico).

Related Thinking

Business professional discussing state and local tax updates while standing in a lobby.
March 27, 2023

State and local tax advisor: March 2023

Article 17 min read
Silhouette of business professional using their computer.
March 24, 2023

New tax credits make energy-efficient home and vehicle upgrades more affordable

Article 11 min read
Group of business professionals talking outside.
Mar. 21, 2023

Taxation mismatches: What anti-tax avoidance directive II (ATAD2) means for taxpayers

Webinar 1 hour watch