Mexico enacts penalty free repatriation program

On January 18, 2017, Mexican government approved a decree that will incentivize the taxpayers who have unreported funds offshore. The gist of the decree is as follows:

  1. Applies to Mexican resident individuals or companies as well as to permanent establishments (PEs) in Mexico that generated revenues through direct and indirect investments maintained abroad as of December 31, 2016.
  2. The funds can be repatriated without any penalties and by paying a flat 8% tax on the repatriated funds
  3. The decree took effect on January 19, 2017 and will end on July 19, 2017
  4. Entrants to the program have August 3, 2017 as the last date to pay the tax
  5. Taxpayers are asked to file the tax returns via SAT website and pay tax within 15 days of repatriation of funds
  6. Repatriated funds must be invested in the listed categories only

Mexican individuals and entities who have the undisclosed funds offshore should carefully review the decree and obtain benefit before the deadline.