MEXICO CITY – Mexico has attracted nearly 3 billion pesos ($161.50 million) in investment into the country through a tax repatriation plan, a tax official said, as U.S. President Donald Trump has floated policies that could hit growth in Latin America’s No. 2 economy.
In a bid to boost Mexico’s paltry tax take and attract fresh capital, Mexican President Enrique Pena Nieto unveiled plans in January to offer an 8 percent tax on earnings from investments that Mexicans bring home.
The program, which runs through June, has generated about 215 million pesos in tax revenue through April 11 on the returned capital, according to Lizandro Nunez, the tax collection manager at Mexican tax authority SAT.
“We think we will receive much greater resources than what we have already received,” through the end of the program, he said in an interview late on Monday, noting that some of the rules have just recently been defined.
Nunez said it was still too soon to rate the repatriation as a success or failure, adding that the government did not set a tax collection goal.
But analysts have expressed skepticism over the plan, arguing that it is risky to invest in Mexico right now.
Mexico’s peso was hammered by Trump, who has threatened to scrap a free trade deal with the country and levy a tax on imports into the United States. He has also pressured American companies like air-conditioning firm Carrier Corp into scaling back investment plans in the country.
The peso has recovered, but Nunez emphasized that qualifying investments include instruments denominated in foreign currencies.
“That eliminates risk,” Nunez said.
A repatriation program last year saw 6.6 billion pesos repatriated, Nunez added.
The 8 percent tax, which is well below Mexico’s top income tax rate of 35 percent, must be paid 15 days after money is transferred. Repatriated funds must be channeled into investments like fixed assets and property for at least two years.
In January, the government said the powerful CCE business lobby estimated the plan could yield $10 billion in investment.