The Mexican government launched a program to repatriate undeclared funds.
The decree took effect on January 19, 2017 and will end on July 19, 2017. These are some of the rules established and benefits:
1. Applies to Mexican resident individuals or companies, as well as to permanent establishments in Mexico.
2. Applicable to investments maintained abroad up to December 31, 2016.
3. The funds must be invested in Mexico for a two-year period counted as of the repatriation date.
4. The funds can be repatriated by paying a flat 8% tax on the repatriated funds. Legal entities must destine the repatriated funds to :
a. The acquisition of fixed assets located in Mexico that are deductible for income tax purposes and used by the taxpayers in their business activities;
b. The acquisition of land and buildings that are to be used in the performance of the taxpayer activities;
c. Investment in research and development regarding projects undertaken by the taxpayer;
d. Loan payments;
e. Taxes due and wages;
f. The performance of investments in Mexico through financial institutions or brokerage houses forming part of the Mexican financial system.
Mexican individuals must invest the repatriated funds through Mexican financial institutions in :
(i) financial instruments issued by Mexican residents;
(ii) shares issued by Mexican companies; and
(iii) as per items a, b, and c above.
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