How Mexico's Tax Reforms Could Affect Business Along the Border Lourdes Medrano - The Christian Science Monitor
go to original November 26, 2013

NOGALES - Expanding Atronix Inc., a Massachusetts-based company, to the border state of Sonora, Mexico, two decades ago proved to be a wise business decision for the manufacturer of electrical wiring systems.

The company has grown significantly since it took over an existing assembly plant here in 1994, says Jeffrey Lang, president of Atronix de México. "We went from 30 employees and less than 6,000 square feet to more than 230 employees and 45,000 square feet."

With the Nogales maquiladora, or factory, accounting for up to 70 percent of the company's annual production, Atronix wants to stay put in Mexico. But President Enrique Peña Nieto's proposed fiscal reforms, which Congress just passed in a modified package that raises taxes on US-owned companies and other businesses, has prompted Mr. Lang's company to consider relocation.

"If what had been originally proposed had passed, we would shut down this facility within 12 months," says Lang, referring to the first round of legislation that included now-discarded measures such as a second import tax for the factories.

The sweeping reforms, which seek to collect funds for social programs and road infrastructure, also raise taxes for high earners and levy a tax on junk food and stock market gains. Lawmakers considered adding a tax on food and medicine but dropped the contentious plan.

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