MEXICO CITY – Investment in Mexico could fall if the United States’ corporate tax rate is slashed from 35 percent to 15 percent, the chief executive officer of Mexico’s largest financial institution said Thursday.
If Congress approves the corporate tax cut proposed by US President Donald Trump’s administration, there will be a greater appetite to invest in the US, BBVA Bancomer CEO Eduardo Osuna said in presenting his institution’s first-quarter results.
Asked if that would lessen investors’ desire to invest in Mexico, he responded affirmatively, noting that the creation of different special economic zones in Mexico had modified the tax regime to achieve the same effect.
“The tax rate in any country creates a cost of production (for the company), and so if your tax rate falls the country is more competitive,” Osuna said.
In a press briefing Wednesday at the White House, US Treasury Secretary Steven Mnuchin unveiled plans for what he said would be one of the largest tax cuts in American history.
Trump’s plan – which is thus far short on details – also would reduce the number of tax brackets for individuals from seven to three (10 percent, 25 percent and 35 percent), among other things.
In presenting the bank’s results for the first quarter, when BBVA Bancomer posted net income of 11.8 billion pesos ($615 million), up 16.9 percent from the same period of 2016, Osuna said that if Trump’s tax plan receives legislative approval it will have implications for many countries and force them to adapt.