The Business Coordinating Council (CCE) issued a proposal to the federal government outlining certain policy proposals focused on mitigating the adverse effects that the COVID-19 pandemic has brought upon the Mexican economy.
While the federal government expressed interest in enacting most of their proposal, no further actions were taken.
As of Wednesday, the CCE convoked (notice attached, in Spanish) the entire private sector of Mexico, civil organizations and workers’ unions, so that, without the participation of the government, they can establish a national agreement to mitigate the effects left by the Covid-19 disease.
Among the actions suggested by the CCE are the following:
- Provide the financial markets with needed liquidity to allow for continued fluidity in the market in the short and long term;
- Maintain financial discipline in the management of public finances; however, any liquidity measures should prioritize the restart of the economy, notwithstanding the immediate effects such measures would have on the federal budget;
- Strengthen the public-private agreement on infrastructure investment, broadly, and specifically, jump-start private investments in energy infrastructure projects;
- Allow for an immediate tax deduction of investments made in 2020, without limitations or conditions;
- Enact measures to allow employers to use tax payments due to provide employees who will be laid off with a minimum wage for sustenance;
- Ensure the application of the rule of law to protect investments already made by employers and other investors;
- Accelerate payments owed to federal, state and municipal government suppliers, with special emphasis on those with commercial arrangements with the national oil (PEMEX) and utility (CFE) companies;
- Accelerate the refund of federal taxes to taxpayers entitled to the same, particularly value-added tax, and reinstate the ability for taxpayers to offset all federal taxes owed from value-added and other federal tax refunds due to them;
- Form a task force to include representatives from the government, the business community and labour to continually monitor the situation and propose actions to respond to this crisis; and
- Implement programs, through the development of the banking system, to allow for the countercyclical investment in sectors most affected by this crisis.
According to McDermott, a global analysis firm, of special interest to foreign investors are (1) the reinstatement of the ability to offset all federal tax liabilities, and (2) the jump-start of infrastructure investment programs. These two measures will provide investors with additional liquidity, as well as new investment opportunities in critical infrastructure projects, which are federally insured by the Mexican government.
SYMBIOSIS is actively advising Canadian companies with operations in Mexico on all aspects of the COVID-19 pandemic. We are tracking developments and are available to assist foreign investors with questions about Mexico’s legal framework and strict compliance options.
J.G.
–
