Mexico lures undeclared cash with tax plan, eyes US$10 billion intake

Mexico said on Tuesday it will offer holders of undeclared capital abroad tax incentives to bring it home in a bid to lure some US$10 billion in investment and steel itself against potential shocks from the incoming Trump administration.

Confirming a Reuters report, the government said it will offer an 8 percent repatriation tax on those funds returning to Mexico in six months, provided they go into investments including fixed assets and property for at least two years.

The 8 percent tax, which is well below Mexico's top income tax rate of 35 percent, must be paid 15 days after money is transferred, President Enrique Peña Nieto's office said in a statement ahead of an expected announcement later on Tuesday.

The government said the powerful CCE business lobby estimated the plan could yield US$10 billion in investment.

Latin America's second-largest economy is facing pressure from U.S. President-elect Donald Trump, who is looking to cut taxes and has threatened a hefty border levy on companies that ship Mexican-made goods to the U.S. marketplace.

Mexico's move, which was floated last week, is in line with similar moves by both Chile and Argentina.