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On Monday, Oct. 18, Mexican President Andrés Manuel López Obrador’s (AMLO) 2022 National Income Package was approved by the Chamber of Deputies’ Economic Commission, including all its proposed reforms to the nation’s Income Tax Law (ISR).

The package, which now passes to the full Chamber for passage, controversially proposes the registration of all legal Mexican adults over the age of 18 with the country’s Tax Administration Service (SAT), in hopes of cracking down on the lack of taxation of informal businesses, though with additions to the ISR’s Article 27 clarifying that this required registration does not necessarily directly correlate with being held to tax obligations.

Another reform within the package makes members of the agricultural, livestock, forestry and fishing industries exempt from paying income tax on such activities, so long as their income remains below 300,000 pesos and they participate exclusively in their respective trade. However, these workers will need to fill out the appropriate paperwork with the SAT to be deemed fully exempt from these payments.

Further reforms to the ISR include an increase in the threshold at which taxpayers will need to dictate their financial statements from 876 billion pesos to 1.65 trillion pesos, to be deemed as large taxpayers under Title II of the ISR.

Refurbished automotive companies like Kavak will also see themselves affected by the changes, as the reforms will see used cars imported from outside of Mexico devalued by 20 percent on average.

Experts warn that these modifications will result in a lack of deductibility of donations to 5,100 of Mexico’s Civil Society Organizations (OSC), taking 8 billion pesos away from philanthropic groups looking to improve the country’s education, environment, culture and beyond.

Likewise, the very ISR reforms that will reportedly take income tax rates down to 2 percent will concurrently see a hike in value-added tax (VAT) by up to 24 percent

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