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Mexico & Nafta - January 2018 (ISSN 1741-444X)

Economic Highlights

Responding to US tax reform: On 21 December 2017 Mexico’s finance ministry (SHCP) announced that it is analysing what fiscal measures to adopt to counteract any effects that the recently approved fiscal reform in the US could have on the Mexican economy. The fiscal reform approved in the US has introduced significant cuts to corporate tax rates in a bid to stimulate investment and domestic economic growth in the US. Analysts have warned that this could negatively affect investment levels in Mexico by making investing in Mexico less attractive compared with doing so in the US. As the Mexican institute of certified public accountants (IMCP), a professional body, has warned: this would in turn negatively impact Mexico’s domestic economy. IMCP explained that “lower foreign direct investment could produce lower economic growth in Mexico and increased exchange rate pressure”. Consequently, Mexico’s business sector has called for the adoption of new fiscal measures by the Mexican government to counteract this. An SHCP statement noted that in response to these calls the ministry has engaged in an open discussion with the Consejo Coordinador Emepresarial (CCE) local business sector lobby group to discuss “the best alternatives to face the increased competition from our northern neighbour and its new tax scheme”.

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