What Mexican taxes will legalized marijuana pay?


It is estimated that there may also be reforms to the Customs Law for the inclusion of cannabis both in relation to the medical sector or its transportation as a raw material.

After the presentation of the draft initiative of the “General Law for the regulation and control of cannabis” on November 6, 2018, many questions have arisen about the legal implications that legalization of cannabis entails, for example: Will the changes to current legislation? What will be the necessary procedures for sale and commercialization? What taxes will be subject to activities related to cannabis?

At first glance, the main activities to be carried out around cannabis are: Production (sowing, transformation, labeling, packaging) and sale (distribution, sale, marketing and carrying); since, the aforementioned draft bill establishes that for the realization of said activities: entities, both public and private, specialized and that its only turn is related to cannabis, we can assume that the income generated by said activities will be subject to Income Tax.

When we talk about production and sales we talk about service provision and alienation of goods, therefore, VAT collection will be involved in the issue of cannabis, but here the purpose of the use of cannabis is involved, because if the purpose is medicinal and it is patent products, as indicated in Article 2 A of the Law on Value Added Tax, it would be calculated based on a 0% rate, if the cannabis has no medicinal use as established, it will be subject to the applicable law, with the possibility of adding specific numerals to the subject to the VAT Law.

The third tax that is speculated to apply to activities related to cannabis is the IEPS, this in reference to the other two legal drugs (tobacco and alcohol) are included in the products that pay this tax, therefore, It is easy to assume that cannabis will pay IEPS in several of its activities. It is also important to consider the subject of the tax already mentioned, the corresponding to the importation of goods, this in compliance with the treaties to avoid double taxation with the countries that Mexico has celebrated and that is legal in these.

What is established in the previous paragraph links us to the issue related to foreign law, as it is estimated that there may also be reforms to the Customs Law for the inclusion of cannabis both in relation to the medicinal sector (products derived from cannabis) or its transportation as raw material, and the possible affectation / inclusion to the tariff values.

For all of the above it is important that those people who wish to get involved in the topic of cannabis, whether in investment funds, creation of medicinal products or destined for playful consumption, import, export, etc., inform themselves and investigate how this could be affect your tax and accounting schemes; therefore, it is recommended to ask for advice from lawyers and accountants in order to find the best corporate and fiscal strategy, in view of the possible aspects generated by the legalization of cannabis in our country and the possible consequences before an international scheme.

Source: forbes

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