The Mexican Value Added Tax Vat

The value-added tax (VAT) is often a major component of national fiscal structures. While its effects on allocative efficiency, inflation, income distribution, and tax administration have been addressed, little work, exists on the theoretical base of a VAT, given its structure. This is essential for knowing how much of the base is actually taxed. Using Mexican national accounts and input-output tables, this paper develops a methodology for calculating the theoretical base of the Mexican VAT for 1980 and 1983 (two years whose individual VAT structures were considerably different). The method is applicable to other VAT systems as well.

The value-added tax (VAT) is often a major component of national fiscal structures. While its effects on allocative efficiency, inflation, income distribution, and tax administration have been addressed, little work exists on the theoretical base of a VAT, given its structure. This is essential for knowing how much of the base is actually taxed. Using Mexican national accounts and input-output tables, this paper develops a methodology for calculating the theoretical base of the Mexican VAT for 1980 and 1983 (two years whose individual VAT structures were considerably different). The method is applicable to other VAT systems as well.

MEXICO TAX, LAW AND BUSINESS BRIEFING: 2005 provides guidance on tax and legal issues investors should consider when evaluating a possible company acquisition, starting a business or entering into a joint venture or strategic alliance in Mexico. This report highlights recent economic, legal, and tax developments in Mexico's changing business environment, with content provided by experts at major accounting and law firms in the region. The 2005 edition of MEXICO TAX, LAW AND BUSINESS BRIEFING features expert analyses on Mexico's structural reform, public institutions, and economic development. This one-volume report offers extensive coverage of Mexico's banking/finance, energy, labor, and maquiladora sectors, as well as in-depth analyses of topics such as corporate structuring, foreign investment, free trade, private equity investment, and taxation.

During the 1970s and 1980s, many developing countries enacted value-added taxes (VATs) as a part of their fiscal structures. The productivity of this source of revenue has depended in large part on the facility with which the tax can be administered. Single rate VATs have proved easier to administer than those with multiple rates. Exemptions and zero-rating tend to complicate administration. Because small taxpayers are so numerous in developing countries and administrative resources so limited, the treatment of small taxpayers has required special attention. The difficulty of taxing services has led most developing countries to omit all but a few services from the tax base. Administrative constraints are the main reason why the VAT that prevails in developing countries is usually very different from the broad-based and neutral tax discussed in public finance treatises.

Guía rápida (infografía) plurilingüe para obtener la devolución del impuesto al valor agregado (IVA) retenido en la adquisición de mercancías autorizadas por las autoridades mexicanas que fueron efectuadas por extranjeros en calidad de turistas durante su estadía vacacional en México. Quick multilingual guide (infographic) to obtain the refund of the value added tax (VAT) withheld on the acquisition of goods authorized by the Mexican authorities which were made by foreigners as tourists during their holiday stay in Mexico.

This review of taxation in agriculture in 35 OECD countries and emerging economies outlines the diversity of tax provisions affecting agriculture, provides an overview of cross-country differences in tax policy, and confirms the widespread use of tax concessions specifically for agriculture, although their importance and modalities differ across tax areas and countries.

In this paper we analyze the incidence of the VAT and its effects on the income distribution. To identify these effects, we rely on two tax reforms undertaken in Mexico that increased the VAT rate for a group of cities and left the rest unaffected. We compare the inflation rate of the affected cities with the exempted cities before and after the law changed. We find that the effect on prices is limited and conclude that the burden of the tax is indeed shared between producers and consumers. Regarding welfare, we find that the VAT is progressive in both absolute and relative terms to the overall expenditure. Finally, we show that an identical change in the VAT rate when inflation is high and persistent doubles its pass-through to inflation and its welfare loss for the average household.