Background on the Situation
Mexico has recently announced an increase in the minimum global tax on Chinese e-commerce platforms like Shein and Temu, effective from August 15th. This change comes after Mexican authorities identified abuse of the ‘minimis’ rule by these platforms to avoid paying their due taxes. The new tax rates are part of a broader effort to regulate cross-border e-commerce and ensure fair competition.
Previous Tax Regulations
In late 2024, Mexico modified its foreign trade rules to start collecting a 19% tax on goods valued under $50 (minimis) imported via courier services from countries without a trade agreement with Mexico. This change was implemented to address the misuse of the minimis rule by certain Chinese e-commerce platforms.
New Tax Structure
According to a resolution published on July 28th in the Federal Register (DOF) by Mexico’s Ministry of Finance (SHCP), the new tax structure is as follows:
- A 33.5% minimum global tax will be applied to goods valued under $50 (minimis) from countries without a trade agreement with Mexico, such as China.
- Imports valued under $50 from the US or Canada will be exempt from this minimum global tax.
- A 17% tax will be applied to goods valued between $50 and $117 from the US or Canada.
- A 19% tax will be applied to goods valued over $117 from the US or Canada.
Contextual Factors
This tax increase in Mexico coincides with the US imposing a 30% tariff on Mexican exports, set to take effect on August 1st. Mexico’s Secretary of Economy, Marcelo Ebrard, stated that Mexico had done its part in negotiations with the US to prevent these tariffs from being implemented.
Key Questions and Answers
- What is the purpose of this tax increase? The primary goal is to regulate cross-border e-commerce and ensure that Chinese platforms like Shein and Temu pay their fair share of taxes.
- Which countries are affected by this tax increase? The new tax rates primarily affect goods imported from China, with lower taxes for goods coming from the US and Canada.
- What are the new tax rates for different value ranges?
- 33.5% for goods valued under $50 from non-trade agreement countries (e.g., China)
- Exempt for goods valued under $50 from the US or Canada
- 17% for goods valued between $50 and $117 from the US or Canada
- 19% for goods valued over $117 from the US or Canada
- How does this tax increase relate to the US tariffs on Mexican exports? The timing of these changes reflects ongoing trade negotiations between the US and Mexico, with both countries implementing measures to protect their respective industries.
