Economic Overview
Mexico has an nominal GDP of roughly $1.15 trillion dollars, making it the fifteenth biggest economy on the planet. As far as GDP at buying power equality (PPP), Mexico’s $2.45 trillion economy makes it the eleventh biggest on the planet. Inside Latin America, Mexico is the second biggest economy, after Brazil.
The economy is ready to recoil extraordinarily this year as the pandemic attacks household and outside interest. A battered work market and intentional social removing will pulverize shopper spending, while frail certainty and raised vulnerability will sabotage venture. A bleak U.S. demand backdrop, remote travel limitations and repressed oil costs will likewise hitter trades. FocusEconomics specialists venture the economy to contract 8.5% in 2020, which is down 1.0 rate point from a month ago’s conjecture, and become 3.3% in 2021.
Main sectors of industry
Mexico’s economy includes hi tech businesses, oil production, mineral exploitation, and manufacturing. Agriculture records for 3.4% of Mexico’s GDP and utilizes over 13% of the nation’s dynamic populace (World Bank, 2019). Mexico positions among the world’s biggest makers of espresso, sugar, corn, oranges, avocados and limes. Steers cultivating and fishing are additionally significant exercises in the food business. Mexico is additionally the world’s fifth biggest maker of brew and its biggest exporter.
Industry utilizes 26% of the workforce and speaks to almost 30.9% of GDP, as indicated by the World Bank. Mexico is among the world’s driving makers of numerous minerals, including silver, fluorite, zinc and mercury. In addition, oil and gas saves are one of the nation’s most valuable belongings. Mexico is an enormous maker of oil and the Mexican oil organization PEMEX reported the revelation of a goliath store comparable to 500 million barrels of unrefined petroleum in December 2019.
The aerospace area has developed strongly, because of the advancement of a bunch in Queretaro and the nearness of almost 190 organizations, including Bombardier, Goodrich, the Safran gathering and Honeywell, which together utilize 30,000 individuals. Mexico is additionally one of the world’s ten biggest vehicle makers. Because of noteworthy land ventures, the development division is dynamic.
The service division establishes 60.1% of GDP and utilizes 61% of the workforce.
Taxation in Mexico
16% – Value Added Tax Laws
Reduced Tax Rate
The supply of goods and services, as well as the use or enjoyment of goods in locals or establishments located in the cross-border zone are subject to a reduced rate of 8%.
The 0% VAT rate is applicable to a substantial number of transactions, including the sale of books, magazines, and newspapers published by the taxpayer, the exportation of goods and certain services, the sale of certain basic foodstuffs (milk, wheat, meat and corn, etc.), patented medicines, agricultural goods and services, etc.
Other Taxes
Excise duties apply on gasoline (% variable), beer (26.5%), wine (26.5% to 53%), spirits (53%), cigarettes and other tobacco products (160% plus an additional quota), services for raffles and gambling (30%), soft drinks (MXN 1/litre), “junk” food (8%), and telecommunications services (3%).
Excise taxes on soft drinks and tobacco products are updated according to the Mexico inflation rate.
The acquisition of new vehicles is subject to taxation, while the different states may impose a tax on the ownership of vehicles.
Investing in Mexico
Main reasons to invest in Mexico:
- Strategic Geographical Position, Mexico is the bridge between the US and Canada and the rest of Latin America.
- Wide Network of Free Trade Agreements (FTAs)
- Highly Qualified Workforce
- Growing Internal Market
- Tax Benefits and Incentives like: zero-rate value-added tax on exports, even when physically exported to a third-party, no local or state income taxes on corporate earnings, value-added tax refunds for IMMEX certified manufacturers.
- Leading Industrial Sectors like passenger vehicles
- Good Infrastructure