Tax Free Meetings On the Chopping Block
Mexico to Eliminate Tax Free Meetings
Since 2003, tax exempt meetings have been one of the most effective sales tools of meetings industry professionals in Mexico. Under the plan, called "Tasa Cero" in Spanish, international organizers are spared Mexico's 16% value added tax (IVA) on their event spend. It's a powerful incentive that makes Mexico's natural beauty, rich culture and high quality meetings infrastructure even more appealing to international meeting planners. However a fiscal reform package making its way through the Mexican Congress is slated to make Tasa Cero a thing of the past.
Tasa Cero was implemented during the administration of former President Vicente Fox, as a way to increase and diversify Mexico's tourism revenue. Tourism is the Mexico's third most important source of foreign exchange, trailing only oil revenues and remittances from Mexican citizens living abroad. The meetings tourism sector contributes $18.1 billion USD per year, which corresponds to 1.43% of annual GDP.
As the market for international meetings tourism has become more competitive, countries such as Spain, Panama and Costa Rica have created similar tax benefits. Many industry experts believe that the elimination of Tasa Cero will disadvantage Mexico in the marketplace, with some saying that potential loss of sales may reach as high as 5%. Oscar Garcia Ramos, President of the Mexico Chapter of Meeting Planners International (MPI), has also mentioned concerns that the elimination of Tasa Cero could tarnish the Mexico brand.
The actual economic impact of the Tasa Cero program is unclear, however, as many states, such as Quintana Roo, are only just compiling a detailed accounting of the tax break
The Mexican Congress is set to approve the fiscal reform package in January 2014