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Mexico – Extra taxes could be repealed in Nuevo León, Mexico City and Puebla

By - 13 February 2020

The Minister of the Supreme Court of Justice of Mexico, Yasmín Esquivel, has put forward a proposal to the Second Chamber of the Supreme Court to rule against an additional tax that states such as Nuevo León, Mexico City and Puebla have imposed on casinos.

The regulation, which was created in Nuevo León in 2017 and in recent years has been adopted by other regions, could as a result be cancelled.

For Esquivel the reasons given for the tax are contradictory. “On the one hand, the claimed taxes were created by identifying an industry in economic growth that would allow an increase in collection; but on the other, they were created to discourage betting,” she said.
According to Esquivel “the contrast between means and ends is clear.”

The implications for the industry could be far reaching and lead to a windfall for the casinos in Nuevo León. Casinos in that state currently charge customers 10 per cent of the amount of their bets and casinos 6 per cent of the total value of bets received, so for 2020 the state expects to collect $520 million pesos for the first tax and $98 million for the second.

In addition to the fact that companies would no longer have to charge their clients 10 per cent, nor pay the 6 per cent tax the Government of Nuevo León would have to return what the casinos paid out for the second six per cent tax since 2017 with interest.

Mexico City charges 10 per cent to players. In Puebla a 6 per cent rate tax on Gambling and Draws was passed for “natural persons, legal entities and economic units that operate games with bets and raffles in the territory of the state.”

The draft ruling of the Minister argues that the Constitution gives the federal government power to legislate on gambling since Mexico passed gaming laws in 1947.
The federal government is currently looking at strengthening federal control over the industry. New rules over how the industry is taxed and monitored are likely under the new National Regeneration Movement (MORENA) administration.

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