Mexico’s entry into NAFTA and the OECD in 1994 has placed pressure on the government to adopt international accounting practices which are closer in line with U.S. standards of tax computation and enforcement. Although the Mexican tax structure does not appear on its face to be excessive, other countries allow exemptions and deductions not available in Mexico. Disadvantages of the Mexican system for the individual include not being able to take marital or child deductions; but corporate advantages include a single level of taxation, and the ability to take an immediate expense deduction on the purchase of raw materials and other inventory. A major problem is that the Tax Code is not uniformly applied throughout the Republic.

The Mexican Tax authorities are remedying problems with the Tax Code through a massive overhaul of the tax system, both in scope and implementation. For example, corporations are now required to accompany each year’s tax return with a sworn audit from a certified public accounting firm. Recent changes introduced in 1997 include an increase in fines for overstating tax losses to as high as 40% of the omitted tax; total or partial omission of estimated tax payments resulting from deception or from taking advantage of an error is now classified as tax fraud; tax fraud will be punished criminally on the basis of the amount involved; and the circumstances in which the federal tax court can resolve tax cases is more carefully defined for would-be litigants.