The AMLO government would reduce IVA to 8% only in the border area; BCS would be excluded

For states such as Baja California Sur and Quintana Roo, the 16% VAT would be retained, since they do not reach the range that the new Mexican authorities will set.

La Paz, Baja California Sur (BCS). According to El Economista,  the new government headed by Andrés Manuel López Obrador , who will take office as president of the republic as of next December, will reduce the Value Added Tax (VAT ) by 50% in the border areas; that is, 16% VAT will only apply 8%; However, within this plan, the State of Baja California Sur is not included, since this initiative only covers 30 kilometers from the dividing line with neighboring countries.

As declared by the appointed Secretary of the Treasury, Carlos Urzúa, the government of the president-elect will create a free zone on the northern border of the country, where half of the Value Added Tax (VAT) of 16% would be applied. only cities like Tijuana, Mexicali, Ciudad Juárez and Reynosa will enter, since the strip, which will cover approximately 30 kilometers, will have a differentiated VAT, after the leftist Andrés Manuel López Obrador will assume the presidency on March 1. December.

However, for states such as Baja California Sur and Quintana Roo, the VAT of 16% would be retained, as they do not reach the range that the new Mexican authorities will set.

“We are going to have a VAT tax in that free zone and nothing else,  probably 8% ,” Urzúa said at a press conference after meeting with a cabinet that will deal with economic issues in the new government.

During his election campaign, Andrés Manuel López Obrador proposed a series of measures aimed at  boosting the economy of the  border region to stop the flow of migrants to the north, including the reduction of VAT in the area; before this, the future Mexican finance secretary informed that on September 15 will present the Expenditures Budget and the initiative of the Income Tax Law to the Congress, which must be carried out jointly with the current authorities, and confirmed the economist Gerardo Esquivel as Undersecretary of Expenses .

“Once they give us the initial model because we are going to reform it, we will have new programs and we will conclude with the presentation of the Expenditure Budget,” he said. “I’m sure there’s going to be a great relationship and absolute help from them,” he added, although he did not mention the fate that will befall those states, which are affected by said strip.

With information from El Economista