Mexico lowers taxes on IPOs

Mexico lowers taxes on IPOs

Economy & Policy Equity IPO Capital Markets Regulation Politics Mexico

The Mexican government plans to lower taxes on the proceeds from IPOs to 10% from 30%, Finance Minister Carlos Urzúa said on Tuesday.

"The idea is to boost IPOs, and a very good way to do that is by simply lowering the costs," Urzúa said at an event with President Andrés Manuel López Obrador and the central bank governor, Alejandro Díaz de León.

The tax break will not apply to all equity offerings in Mexico, Urzúa said, but it will count for companies that want to raise capital by selling shares for the first time. "That will give an incentive for companies to enter the stock market," he said.

The BMV stock market in Mexico City lists 141 companies, which is much lower than other countries in Latin America, according to Urzúa. Chile, which has one-sixth the population of Mexico, has 50% more companies in the stock market, he said.

Urzúa also said that the government will lower corporate bond taxes for foreign investors and also grant Mexico's pension plans, known as afores, more discretion on investment decisions "to encourage long-term productive investments and promote voluntary savings."

The BMV rose 1.65% to close at 43,543 points after Urzúa's announcement on Tuesday. It held those gains and went up a slight 0.24% to 43,648 points on Wednesday.

 

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