tax perks at risk, mexico factories shelve growth plans

Turacala, Mexico (Reuters)-
Mexico\'s assembly plants have put their expansion plans on hold, waiting for tax reform, which will threaten their welfare, but low wages and proximity to the US should stop the massive outflow of manufacturing competitors like China.
The light assembly plant in Mexico, or \"Quilting\", accounts for nearly two-
Non-third place in Mexico
Oil exports of about $196 billion (122.
9 billion)
For a year, they have been lobbying against a reform proposal that they believe will kill the competitive advantage.
132-Leon Samit
In the central state of Tlaxcala, the human factory produced stainless steel wires, delaying the import of $1.
The 36 million machines will increase production for the third time, fearing the planned cancellation of key benefits for quilting decorations.
\"This fiscal reform proposal is a nightmare for us,\" Sametz said . \" His factory has an oven that heats the wire to 1,200 degrees Celsius to grow and shrink the wire for watering the hose
President Enrique Peña Nieto is seeking to boost weak taxes by phasing out tax breaks, such as in the past 50 years to help Mexico-
Asian-based companies compete with American factories. S. market.
Critics say tax havens
Style benefits are unfair and spur fraud, but the factory complains that the reform will pay them nearly $25 billion in sales tax every year, which may affect cash flow, although they will be compensated later
The reform could also increase revenue by more than four times.
The company says folding by raising tax rates and tax bases and reducing deductions.
Lawmakers are prepared to reduce the sales tax section, but it is not clear to what extent they will meet the needs of the industry, warning that companies may move if fiscal reforms are scheduled to be completed by the end of October.
Still, thanks to Mexico\'s natural advantage, cheap transportation from low wages to the United States, the government is betting that companies will continue to stay.
Some experts agreed. “It’s . . .
\"Crocodile tears,\" said Ehtisham Ahmad, a senior researcher at the London School of Economics, who suggested Mexico work together to abolish the maadora tax system.
\"These people will not leave and stop production.
\"Under the US tax sweet sweetener program, the quiladora industry began in 1965. S.
The company will set up light assembly plant exports at the border and grow rapidly during 1990, thanks in part to free trade agreements with the United States and Canada.
But after China joined the World Trade Organization in 2001, the companies faced resistance, attracting companies with low wages and lower tariffs and taking away the United States. S.
Market share in Mexico and other countries.
Mexico subsequently lowered the maadora income tax rate from 30% to 17. 5 percent.
The new tax reform will remove the reform and restore the tax rate to 30%.
The proposed reform will also remove a provision exempting quilting decorators from paying VAT (VAT)
If they export the final product, but need the government to refund the payment later, it is \"temporary\" import.
This will raise new cash flow demand for companies, and as the government raises VAT in border cities to a national level of 16%, many of which will face higher taxes, industry insiders said, the discount is now 11%.
\"They made it very expensive to keep quiladoras growing at the same rate,\" said Ernesto Ocampo, tax advisor to Ernst & Young . \".
Fearing that the cost forecast will rise, he said, the two clients have put their investments on hold.
Tax experts say the reform will also limit wages and benefits that quilting decoration companies will deduct from their income tax and impose a 10% tax on dividends, a common way for business parents to return profits.
Trefilados Inoxidables Mexico, Sametz is determined to pay its Swiss Novametal parent company through dividends and other methods, the manager said.
The program will also limit the number of companies eligible for the maadora benefits, allowing only companies that export 90% of their sales to participate, from the current 10%, or $500,000 of exports per year.
Lawmakers privately said the reform could be revised to include a \"certification program\" that would allow factories that export most of their products to pay import VAT.
Cesar Camacho, chairman of the governing body Revolutionary Party, said: \"We will find a way to ensure that temporary imports continue to be respected and protected . \".
Peña Nieto took office on December and promised to adopt a series of long-term
Looking for reforms aimed at boosting economic growth, including expanding the negligible tax base to enable the country to earn revenue from the ailing national oil giant Pemex.
There are only nine in Mexico.
In 2012, 7% of GDP was collected through taxes, excluding Pemex income, which is 34-
National Organization for Economic Cooperation
Operation and Development.
Part of the problem is a series of special systems, such as those issued to sewing workers, which in turn contribute to abuse.
For example, Mexican companies have set up \"maadora\" subsidiaries to take advantage of lower income tax rates.
They also want to exempt the import supply from VAT and promise to export finished products, but only sell them domestically --
Some estimate that this dodge accounts for half of the VAT exemption claimed.
\"We do not have the right to cancel the different tax treatment for processing workers. . .
We\'re just supervising the factory so they don\'t abuse certain plans, \"said Aristoteles Nunez, director of the tax collection office.
Critics say the government is over. reacting.
\"Which companies should the government know (commit fraud)
Punish them.
They have no reason to punish the whole industry, \"one 150-
The human ditch machine manufacturing plant in sonola hermosilo.
\"The instructions I get are ifreform)
Starting from January, we started to send the equipment back to the United States and started to close the factory.
But we have many reasons to stay.
U is the largest processing plant. S.
The parent company can apply for credit from the United States. S.
Income tax paid in Mexico.
Analysts at the Bank of America say Mexico\'s manufacturing sector costs about five times less labor than China, and factory wages are lower than those in Brazil, Indonesia and the Philippines.
Compared with countries like Taiwan where wages are still low, Mexico\'s transportation costs are a key advantage.
Move 40 in less than 3 days, $3,460-
According to A. \'s data, walking containers from Mexico to the United States, in contrast, it takes nearly 21 days and $4,665 to ship the same goods from China. T.
Colney, a consulting firm.
\"There will be no negative impact on the economy or its competitive power,\" said Benito Berber, an analyst at New Securities in New York.
\"People who abuse the system will be affected.