Not Business as Usual in Mexico, as World Bank Reports Improvements

November 16, 2015Mexicoby EW News Desk Team


The World Bank recently issued its 2016 World Bank Doing Business report. Among its findings, Mexico was pleased to discover it has improved its ranking in the world for best place to do business up four spots to number 38, and up a whopping 11 spots to 92 for the best tax environment.

Each year, the World Bank publishes its World Bank Doing Business report. The project seeks to provide objective measurements and ratings of business regulations, tax environments, and other factors affecting the ease and security of doing business in 189 different nations around the world. A report flowing out of that project, Doing Business 2016: Measuring Regulatory Quality and Efficiency, shows Mexico improving from 42nd to 38th place in the category of easiest countries in which to do business, and from 103 to 92 in national tax regulations.

The report comes from information collected from a number of sources, both internal to Mexico and from outside sources. Much of the data came through surveys of economic and tax professionals, then compiled into a uniform and accurate picture of the regulatory scene in not only Mexico, but also the other 188 nations studied, as well.

According to the Yucatan Times, the new Paying Taxes report underscored the importance of electronic tax filing. According to the report, more than 85 percent of European nations now rely on electronic tax filing (i.e., filing one's taxes across the internet), as opposed to the mere 30 percent that allowed the practice as recently as 2006. Mexico recently joined the ranks of such nations, contributing largely to its surge in the rankings.

Mexico's improvements also relate, in large part, to a great reduction the time businesses have to spend on their tax compliance. Electronic filing and other tax regulation improvements mean that corporations now spend just 286 hours per year preparing their taxes, as opposed to the 334 hours it took last year. Much of the improvement is attributable to the elimination of the Business Flat Tax (IETU) as well as the aforementioned introduction of electronic filing. These systems greatly improved corporations' ease of preparing and filing corporate income tax, employers' social security contributions, payroll, property, vehicle taxes, and VAT, making them all payable online now, as well.

Accounting firm Russell Bedford México's managing partner, Jorge Jiménez, commented on the improvements: "It is gratifying to see Mexico's improved tax environment recognized in this way." He went on to say, "However, while considerably better than the average 361 hours per year recorded in other Latin American countries, Mexico's performance still falls far short of the 176.6 hours recorded in the OECD countries. Further reform is clearly needed if Mexico is to become genuinely competitive worldwide."

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