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Mexico: Fiscal Benefits Relief for the Populations Affected by the Earthquake

(Oct. 20, 2017) In a decree published on October 2, 2017, the Mexican government granted  fiscal benefits to taxpayers who were affected by the September 19, 2017, earthquake in municipalities in the states of Mexico, Guerrero, Morelos, Oaxaca, Puebla, and Tlaxcala, but not in Mexico City. The Secretary of the Treasury, José Antonio Meade, explained that the capital of the country will separately receive relief; the Treasury and the local government will jointly design a  package of fiscal stimuli focused on the needs of reconstruction or repair of houses in the capital.  (Hacienda Otorga Beneficios Fiscales por Sismo del 19-S, EL FINANCIERO (Oct. 2, 2017); Decreto por el que se otorgan diversos beneficios fiscales a los contribuyentes de las zonas afectadas que se indicant por el sismo ocurrido el 19 de Septiembre de 2017, DIARIO OFICIAL DE LA FEDERACIÓN (Oct. 2, 2017).)

Among the measures included in the Decree are deferral of the payment of taxes and the immediate deductibility of investment in new assets in the affected areas for the period from September 19 to March 31, 2018, applicable to 100% of the amount above the original amount of the investment. (Hacienda Otorga Beneficios Fiscales por Sismo del 19-S, supra.) Legal entities in the affected areas are exempted from making estimated income tax payments for September, October, November, and December 2017. (Id.) Individuals may defer the obligation to file tax returns the fifth and sixth bimonthly periods of fiscal year 2017, but must file them by January 2018 at the latest. (Id.)

Taxpayers will be able to remit the value-added tax (VAT, locally known as IVA) and excise tax (locally known as IEPS) in three equal installments from September to December 2017. In addition, applications for VAT refunds submitted before October 16, 2017, will be processed within a maximum of ten business days. (Id.)

Luís Madrazo, head of the unit of Economic Planning of the Treasury, said in an interview that the fiscal incentives granted to the affected people and communities will inject more liquidity into the economy and enable commercial and economic activity to recover more quickly. (Id.)