The withholding of the Income Tax (ISR) that banking institutions compulsorily apply to all savers in Mexico will no longer have an increase of 886% by 2024, as proposed by the Income Law initiative sent to Congress by the federal Executive. well The increase will only be 233%, meaning that next year the retention rate will go from 0.15% to 0.5%.
The majority of Morena legislators in both Chambers of the Legislature were encouraged to change what the Ministry of Finance requested, and decided that Mexican savers would be withheld – for ISR – a rate of 0.5%, in contrast to the rate of 1.48% that the Executive proposed.
Thus, both deputies and senators approved the Federation Income Law for next year, establishing an “update” in the provisional Income Tax withholding rate lower than what the Treasury originally requested.
With this, if you receive interest on your savings, the bank will make a provisional ISR withholding of 0.5%, which It helps the government to obtain resources in advance on account of what you are supposed to pay in your annual declaration.
For example, if today a term promissory note offers a 10% annual return, and you decided to invest 50,000 pesos, you would have that amount per year, plus 5,000 pesos of interest. It is to the latter that the withholding rate applies, so in 2024 25.00 pesos of ISR will be deducted from the 5,000 pesos of interest.
On the other hand, in 2023 – as the withholding rate is lower – the discount on that same amount of interest is 7.50 pesos. Ergo, the increase is not minor, although we must recognize that initially it was proposed, following the same example, that for 5,000 pesos of interest, 74.00 pesos would be retained, which was not admitted by both Houses of Congress.
Less savings and investment
To get a closer idea of what the 233% increase in the ISR withholding rate represents, we only have to apply the figure to the price of some everyday consumer product.
For example, if today a 620-gram box of cereal costs 80.00 pesos, with a 233% increase its price would be 266.40 pesos. Likewise, if today we pay 55.00 pesos for a 950 ml bottle of cooking oil, with the increase the price rises to 183.15 pesos.
The same will happen next year, but applied to the interest on savings, so the increase in the ISR withholding rate, although it generates the government to have more resources in advance, also discourages savings and inhibits more investments arrive in the Mexican banking and financial system.
This increase in tax withholding for savers in our country, In some cases it may also involve double taxation, since the resources that are saved come from income from which various taxes were previously deducted.
In this regard, upset by this increase, and considering that in the Income Law Congress endorsed that in 2024 our country would have a debt of 1.9 trillion pesos, the opposition senators announced that they will challenge this rule before the Supreme Court of Justice of the nation.
Next year, the federal government expects to have income of 9.66 billion pesos, a figure in which the aforementioned debt is already included. With this, the balance of public sector debt will be 17 trillion pesos by 2024, while this liability was 10.5 trillion in 2018.
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Surya Palacios Journalist and lawyer, specialist in legal and human rights analysis. She has been a reporter, radio host and editor.