MEXICO Law and Practice Contributed by: Melissa Franco and Mauricio Oropeza, Deloitte Impuestos y Servicios Legales, S.C.
training of each employee in the fiscal year or 25% of the expenses related to innovation. There are also some local incentives in each state for specific industries. Regional incentives in the north border are of Mexico, such as the “Decree of tax incentives for the northern border region”, apply for taxpayers with a tax address, establishment or branches (registered with the tax authorities) within the northern border region. This tax incentive is also applicable to the southern border region, and both incentives allow certain taxpayers to apply an income tax credit and a value added tax reduction. 9.4 Tax on Sale or Other Dispositions of FDI The Mexican Income Tax Law ( Ley del Impuesto sobre la Renta ) states that, in the sale or disposal of shares, partnership equity or any title that represents the property of assets that will have its source of wealth within the national territory, when the person who issued them is a resident of Mexico or when the book value of said shares or securities derives directly or indirectly from more than 50% real estate located in the country, a 25% rate will be applied over the total amount of the transaction, without any deduction. However, if the taxpayer has a representative in the country and is resident abroad for tax purposes, and its income is not subject to a preferential tax regime, or if the taxpayer is resident in a country with a ter - ritorial taxation system, then they can apply for a 35% rate over the net gain. For individuals residing abroad who receive income from the sale of real estate, income is considered to be obtained in Mexico when the goods being sold are in Mexico and the tax must be calculated by applying the rate of 25% on the total amount, without deduc - tion. 9.5 Anti-Evasion Regimes Mexican regulations impose a clear and robust anti- evasion regime, with the Federal Tax Code ( Código Fiscal de la Federación , or CFF) stating that tax authorities have the power to “reclassify” a transac - tion when it lacks a business purpose and generates a direct or indirect tax benefit. In this sense, such act will have tax effects corresponding to those that would
have been carried out to obtain the economic benefit reasonably expected by the taxpayer. In addition, there are several procedures contained in the tax regulations to avoid and discourage the issu - ance of false invoices or the simulation of non-existent transactions, as well as the UBO regulation (see 3.2 Regulation of Domestic M&A Transactions ). 10. Employment and Labour 10.1 Employment and Labour Framework Labour relationships can be individual or collective, and are regulated within the Federal Labour Law ( Ley Federal del Trabajo , or LFT). In both cases, the minimum employment rights and compensation for workers include the following. • Minimum wage – the general minimum wage is MXN315.04 daily and the Northern Border Free Zone minimum wage is MXN440.87 daily. The minimum wage can vary according to the specific profession/job/occupation. • Holidays – workers with more than one year of service are entitled to a minimum period of 12 working days of paid annual leave per year, which will be increased by two working days for each subsequent year of service, up to 20 working days. Subsequently, the vacation period will be increased by two working days for every six years of service. • Working hours – the maximum duration of the working day is eight hours during the daytime, seven hours during the night-time and 7.5 hours during the mixed workday. The worker shall be granted at least a half-hour break outside of the workplace (at the discretion of the worker). For every six days of work, the worker shall enjoy at least one day of rest with full salary paid. In Mexi - can law, labour exploitation is classified as a crime, defined as subjecting a person to work hours above the limits stipulated by the LFT. • Labour conditions of the workplace – according to the LFT, all workplaces must comply with all the hygiene and civil protection regulations and condi - tions for the employees to carry out their activi - ties. For workers that have more than 40% of their
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