Mexico prepares for VAT rise
Thursday December 17, 2009
Businesses across Mexico are being urged to prepare themselves for the upcoming increase in the VAT rate.
From January 1st 2010, the standard VAT rate in Mexico will increase from 15 per cent to 16 per cent, so taxpayers have been advised to make the necessary amendments to their invoicing systems so they can charge their customers the new rate.
The new VAT system will work on a cash-flow basis – taxpayers have to account for output VAT when it is effectively collected from their customers and will only be able to credit input VAT when it is paid to suppliers.
Officials said any goods and services supplied up to December 31st 2009 for which the consideration is collected after January 10th 2010 will be subject to the new VAT rates.
Furthermore, taxpayers who have issued an invoice to a party applying a rate in force until December 31st and who do not collect payment within the first ten days in January will have to charge the one per cent VAT increase to their customers.
Mexico’s credit rating was recently downgraded amid concerns about the country’s economic growth prospects.