Tax Competitiveness of the Maquiladora Industry
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index
Tax Competitiveness of the Maquiladora Industry, a Study from the International Perspective
From figures shown in table 1.5 we
ascertain the fact that the competitive
gap widens even more when
segregating social security taxes,
which are not subject to any type of
incentives in the assessed regimes.
This means that by comparing only the
fiscal cost of such taxes that do receive
preferential treatment, the result
evidences a substantial drawback
of the maquiladora regime versus
the preferential regimes of
comparable markets.
Indeed it is worth emphasizing, for
example, that in the case of Costa Rica
and considering social security taxes,
the TTI gap was only 6%; however,
when segregating these taxes and
analyzing only corporate taxes, the gap
widens to 32%.
Chart I.1 reveals that Mexico and
Thailand have the highest and
lowest effective corporate tax
rates, respectively.
Specifically in the case of social
security taxes, Chart 1.2 shows that
Mexico and South Korea have the
highest effective social security taxes
rate, respectively.
The chart depicts the
aforementioned findings.
With respect to the total tax index,
Chart 1.3 confirms the finding that
puts Mexico as the least competitive
country, followed by Costa Rica, Brazil,
China and Thailand, while fiscally, South
Korea turned out to be the
most competitive.
100%
90%
80%
70%
60%
50%
Chart 1.4 shows the ranking of
assessed countries considering only
the analysis of corporate taxes and
excluding social security taxes. This
analysis confirms that Mexico is the
least competitive country in terms of
fiscal costs being that its effective rate
is the highest, followed by China, Costa
Rica, South Korea, Brazil and Thailand.
Therefore, Thailand, one of the most
dynamic South Asian sub-continent
economies, proves to be more
competitive than Mexico with
40%
30%
20%
10%
0%
Tax Competitiveness of the Maquiladora Industry, a Study from the International Perspective KPMG. 11
Chart 1.2 Effective Social Security Taxes Rate
L
Source: Prepared by KPMG in Mexico 2012.
Mexico
China
Brazil
Costa
Rica
South Thailand
Korea
15%
10%
5%
Chart I.1. Effective Corporate Tax Rates
0%
Mexico
China
Brazil
Costa
Rica
South Thailand
Korea
Source: Prepared by KPMG in Mexico 2012.
the lowest Total Tax Index for
corporate taxes.
Reference should, however, be made
to the fact that thanks to the results
obtained from this analysis, we
have substantiated that actually, the
maquiladora regime is attractive and
offers more competitiveness to Mexico.
However, there are areas of opportunity
where much can be done to improve
the fiscal competitiveness of the
regime in order to stimulate further
foreign investment and, consequently,
the creation of jobs.
This analysis is based on research
of cost data of the 2010-2011 period.
Taxes reflect studies made for the
same period (2010-2011) and consider
the legislation of each of the current
promoting regimes. For this reason,
results are subject to changes due to
amendments to existing legislation.
Evidently, rates and costs will
change over time.
Chart 1.3 Total Tax Index
100
90
80
70
60
50
40
30
20
10
0
Source: Prepared by KPMG in Mexico 2012.
Mexico China
Brazil
Costa South Thailand
Rica Korea
30
8852022 °
100
90
Chart 1.4 Total Tax Index (TTI-SS)
Source: Prepared by KPMG in Mexico 2012.
Mexico
China
Brazil
Costa
Rica
South Thailand
KoreaView entire presentation