Remittance tax is discriminatory and would violate treaty: SHCP

Edgar Amador Zamora, Secretary of Finance and Public Credit (SHCP) , stated this Friday, May 16, that the initiative to impose a 5% tax on remittances sent by migrants in the United States abroad is discriminatory and would violate the Mexico-United States Double Taxation Avoidance Treaty, in force since 1994.

In PresidentClaudia Sheinbaum 's "La Mañanera del Pueblo" (People's Morning Show), the secretary noted that the principle of non-discrimination in tax treaties seeks to ensure that foreigners are not treated as inferior or less favorably when paying taxes in a country.

He highlighted that remittances sent by fellow countrymen to their families amount to $64.7 billion, equivalent to 3.5% of the Gross Domestic Product (GDP).

"The income that countries send to their families in Mexico has already been taxed, they've already paid income tax, and they've already paid the corresponding taxes. If this additional tax were imposed, it would constitute double taxation."

"What would this imply for the U.S.-Mexico Double Taxation Treaty? It would imply tax discrimination," he said.

At the National Palace, the Secretary of Finance explained that 99.1% of remittances were received through electronic transfers, primarily from California, Texas, and Colorado.

The main destinations for remittances, he indicated, are Michoacán, Guanajuato, Jalisco, Mexico City, and the State of Mexico.

He emphasized that remittances play a fundamental role in several states; as a proportion of state GDP , they represent 16% in Chiapas, 11% in Michoacán, and 11% in Zacatecas.

The head of the SHCP also reported that remittances constitute more than 20% of family income and contribute to reducing poverty and improving the living conditions of the receiving communities.

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