Although the federal government has established the fight against tax evasion as one of its priority objectives, the country is not considered among the best prepared to prevent this leakage of tax revenues that costs billions of pesos a year
Despite the fact that the government of Andrés Manuel López Obrador has established the fight against tax evasion as one of its central objectives, international and independent observers continue to find in the country the characteristic features of a “ tax haven ”, although not to their degree. more extreme.
The actions that have been implemented during the current administration to guarantee the payment of taxes by all taxpayers, and particularly by large national and transnational companies, have ranged from the executive to the legislative sphere, with reforms that have aggravated severe punishments for tax evaders.
However, in the most recent “Index of Corporate Tax Havens 2021”, prepared by the Tax Justice Network organization, Mexico was not placed among the best fighters of tax evasion, but in the middle of the table, in place 31 out of the 70 nations evaluated; whereas seat 1 represents the worst rating (British Virgin Islands); and 70 (Montserrat), the best.
The organization explains what its study measures: “The Corporate Tax Havens Index classifies each country according to the intensity with which the country’s fiscal and financial systems allow multinational companies to transfer their profits outside the countries in which they are those that operate and, consequently, pay less taxes than they should pay there ”.
The place that each nation occupies in the study is defined based on two variables: a rating on its tax and legal system, and an estimate of the financial activity it hosts from transnational companies.
The index assesses the tax and legal system of each country with a ‘corporate tax haven score’ out of 100, where zero represents a zero margin for corporate tax fraud and 100 an uncontrolled margin for corporate tax fraud (Mexico scored 54)
“Index of Corporate Tax Havens 2021”
Tax Justice Network
“The country’s corporate tax haven score is then combined with the volume of financial activity carried out in the country by multinational companies in order to calculate the degree of cross-border corporate tax abuse facilitated by the country.”
In fact, tax evasion by multinational companies referred to in the “Corporate Tax Havens Index 2021” is well identified by the Mexican authorities as one of the main problems facing the national treasury, as can be corroborated in the Second Government Report of López Obrador, where it is indicated in the section on “Lowering Tax Evasion and Avoidance”.
“Based on the modifications made to the Mexican tax provisions as of 2020, aimed at combating tax evasion and avoidance, especially that generated by multinational companies through the artificial transfer of the profits obtained in Mexico to places with little or no taxation, which makes it possible not to pay corporate income tax in national territory, the following action is being implemented:
“Preparation of administrative rules and technological infrastructure that will allow agile compliance by taxpayers of the obligation to disclose the schemes related to issues identified as high risk by the tax authorities, in order to have information in advance on tax schemes. Potentially aggressive tax planning ”.
BLACK HOLE OF TAX EVASION
On March 2, 2019, the Senate of the Republic released an estimate on the tax evasion carried out in the country.
Only in 2016 the tax evasion rate in Mexico represented 2.6 percent of GDP, which meant that the government did not collect around 510 billion pesos, according to an investigation prepared by the General Directorate of Legislative Analysis of the Belisario Institute. Domínguez ( IBD ).
That amount that the country stopped collecting due to tax evasion, to put it into perspective, would have been enough to fund almost four (3.95) “Pension for the Well-being of Older Adults” programs, which in 2020 will be implemented by the federal government with a modified annual budget of 129,020 million pesos.
For this reason, the Senate also pointed out: “The investigation entitled” Tax Evasion in Mexico “explains that this crime affects the entire nation, since the defendants, by trying to hide their earnings, stop paying taxes that affect state finances and limit government resources to carry out public policies or social programs ”.
The Senate estimates the loss due to tax evasion at 510 billion pesos annually, enough to fund 4 Pension programs for the Well-being of the Elderly
Among the greatest achievements reported by the Tax Administration Service (SAT), headed by Raquel Buenrostro Sánchez, in this section of the Report, called “Lower Tax Evasion and Avoidance”, the recovery of debts that were particularly large taxpayers were included.
There it is indicated that “in support of the fight against tax evasion and avoidance that allows generating greater resources to meet the needs of the population (…) In the first half of 2020, considering cash and virtual figures, 219 thousand 500 million were collected of pesos for acts of inspection and collection without the need for judicialization, this being the highest amount that has been collected during this period in history ”.
The implementation of the annual inspection program for Large Taxpayers is also mentioned, which “aims to make the inspection process more efficient” with four main axes: I Programming of new acts; II Inspection in process; III Analysis of revocation appeals; and IV Monitoring of balance control; and that “resulted in a collection of 120.6 billion pesos.”