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 Mexico stands-out in expensive rents
Mexican industrial buildings stand-out in Latin America for their quality. and for their expensive rents. According to the report Latin America, The Caribbean Real Estate 2007", prepared by the real estate firm CB Richard Ellis (CBRE), average rent per square meter of a Class A industrial building is US$4.75, the highest price in 40 countries. Argentina offers industrial space for an average of US$4, Panama US$3, Chile and Costa Rica US$4.
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Auto parts industry forecasts 6.4% growth
The Mexican auto parts industry association, Industria Nacional. de Autopartes (INA), forecasted a 6.4% growth in production upon closing 2007, to reach a value of US$27.8 billion. INA's Chairman, Ramon Suarez Fernandez, is confident this figure will be reached, after the sector faced a slow first quarter in production figures, which were 11.42% below the same term in 2006.
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Mexico ranks second in competitiveness in Latin America
Geneva, Switzerland - Mexico is 52nd in global. competitiveness and second in Latin America in the ranking of the World Economic Forum, where Chile, 26th in the world, is the most competitive country in LA. Last year Mexico went up one place in the Competitiveness Index of World Economic Forum (WEF), by going from 59th to 58th among the 125 economies considered, but the position cannot be compared to this year's because the Forum changed its ranking method.
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More investment from India coming to Mexico
Trade and business agreements entered by Mexico make it viable as an international. operations center for many of the economy's fields: Ambassador. Investment winds are blowing from India to Mexico in several areas, including systems, systems solutions, plasma screens, solar energy panels and also in coal industry, where close to US$250 million will be invested in Altamira, Tamaulipas, informed the Ambassador of India in Mexico, Rinzing Wangdi.
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Fiscal exemption to maquiladoras will cost MEP$10 billion
Mexico City - Even before the Fiscal Reform approved last month by . the Congress is fully enforced, the Federal Government already authorized an exemption scheme, specially for maquiladora companies, self-service stores and highways under concession, which will have a cost for taxpayers of MEP$10 billion, an amount equal to 12.5% of the additional resources that are expected to be collected with the changes to the tax system.
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Delphi will sell another plant in Mexico
Mexico City - Delphi, the auto parts manufacturer, is looking for new owners for Global Suspension, the Division that produces shock absorbers, struts, damper modules and electronically controlled suspension products, with plants in the United Kingdom, Poland and Mexico, the Company informed. In Mexico, Global Suspension employs a little under one thousand people and it has not been defined yet if workers will be laid-off, as happened early this month when the sale of the brakes plant in Saltillo was announced, or if the new owners will employ all of Delphi's workers.
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Japan requests from Mexico a better supply chain
Monterrey - Mexico is losing competitiveness in manufacturing industry due to the. difficulties foreign companies have in finding local components, the Japanese Ambassador, Massaki Ono, warned yesterday during a business summit. "Mexico is losing competitiveness as a site for manufacturing plants, most Japanese plants here are suffering from a lack of supporting industries", assured Ono in the Fifth Meeting of the Business Summit, held in Monterrey.
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Lexmark rules out closing another plant
Executives from Lexmark in Juarez ruled out the possibility. to close a second plant in this city. The second injection plant located here will go ahead with its growth plans, but with a lower production level, said Rocio Sarabia, Human Resources Regional Director. "Lexmark's restructuring plans in Mexico, which purpose is optimizing injection supplies will continue", she said.
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ARTICLE OF THE WEEK
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| 2008 Mexican Tax Reforms Part 2 |
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By PriceWaterhouseCoopers |
 THE SINGLE OR FLAT RATE BUSINESS TAX (Flat Tax)
The new Flat Tax is a supplemental tax to the Income Tax, which substitutes and repeals the Asset Tax, and is payable to the extent the Flat Tax computation exceeds the combination of Income Tax and other credits.
The characteristics of the Flat Tax are as follows:
Subjects, object and base
The corporate and non-corporate residents, including individuals, as well as the residents abroad with a permanent establishment in Mexico are subject to the Flat Tax on income obtained from the following activities:
- The sale or disposition of property.
- Providing independent services.
- Granting of the temporary use or enjoyment of assets.
These activities are generally defined based on provisions in the Value-added Tax (VAT) law.
Residents of Mexico will be subject to tax on worldwide sourced Flat Tax income, while residents abroad with a permanent establishment in the country will only be subject to tax on Flat Tax income attributable to the establishment, as determined according to the MITL, or income tax treaties that Mexico has in force.
 The initial Flat Tax is calculated by applying the 17.5% tax rate to the to the net positive result from recognizing Flat Tax income which is effectively collected and deducting amounts that are effectively paid for authorized Flat Tax deductions, described later in this bulletin.
A transitional Flat Tax rate of 16.5% and 17% applies for 2008 and the 2009, respectively. Nevertheless, the rate for 2009 will be subject to re-evaluation by the Executive branch.
Gross income included in Flat Tax base
Flat Tax income includes income which is effectively "received" for the following concepts:
- The price or the consideration obtained for the transactions that have occurred during the taxable year, plus
- Additional amounts charged for federal taxes (except "transferred" taxes), and federal licenses or fees, interest on normal or late charges, conventional damages or any other concept collected, including the advance payments or deposits on the transaction, and
- Amounts received from insurers pursuant to claims on insurance policies or reinsurance claims relating to goods deducted for Income Tax purposes.
- When the consideration for the sale is received in goods or services, or a stated consideration does not exist, the Flat Tax income shall be the market value or appraisal value of the good or service received. In the property exchanges and payments in-kind, the income shall be an amount equal to the value of the good that has been transferred.
- Royalty income for the temporary use or enjoyment of intangible assets (such as patents and trademarks) is only taxed when contracted between unrelated parties, and consequently, the payment for these concepts to unrelated parties is also deductible for Flat Tax purposes. On the other hand, royalties to related parties are neither taxable nor deductible for Flat Tax purposes, although it is clarified that related party royalties for the temporary use or enjoyment of industrial, commercial or scientific equipment are included in or deducted from Flat Tax income.
The Flat Tax law provides that the term "related party" is defined in the income tax law.
Moment of income recognition
 The Flat Tax income is normally recognized when the consideration corresponding to the activities in the Flat Tax law is received, generally based on the cash basis rules established in the VAT law, with some exemptions, as follows:
If the income for exported services or exported sales is not collected during the 12 months following the month in which the export was made, it is recognized upon expiration of that 12-month period.
When the goods are exported and the sale or the temporary use or enjoyment occurs while the assets are abroad, the Flat Tax income will be recognized at the same time as when the income is recognized for income tax purposes.
Other exemptions and special cases are discussed later in this document.
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MEXICO'S WEEKLY HEADLINES
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| » Mexico will fortify trade agreement with Guatemala, El Salvador and Honduras
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| » Mexico waits for height in 2008 |
| » There will be more floods in Tabasco |
| » Automotive industry: Coahuila goes at the top |
| » Improvement economic panorama, according to survey of the Banxico |
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