MEXICO is considering reducing the corporate income tax rate from 33% to 28% over three years starting in 2005.
This is one of several tax reform proposals that the Fox administration submitted to the Mexican Congress on September 8. The tax reform plan would also let companies deduct profit-sharing payments to employees before computing income taxes and impose “thin capitalization”rules that would deny a company
deductions for interest payments to the extent its debt-equity ratio exceeds 2 to 1. There would be a five-year transition period for companies whose debt-equity ratios are currently too high.
The Fox administration has had trouble in the past putting its legislative program through Congress.