Redundant Workers in Mexico Exempt from Paying Taxes on Unemployment Compensation

In a move aimed at easing the financial burden on redundant workers, Mexican President Vicente Fox has exempted them from paying Income Tax (ISR) on their unemployment compensation, provided they invest it in social enterprises. This new law, published in the official government gazette Diario Oficial de la Federacion, applies only to natural persons and requires workers to acquire corporate capital from a firm that fits specific criteria. The exemption is available only for investments made during 2005.

Key Takeaways:

• The new law exempts redundant workers from paying ISR on their unemployment compensation if they invest it in social enterprises.
• The exemption applies only to natural persons and requires workers to acquire corporate capital from a firm that directly or indirectly acquires fixed assets from a company that employs workers.
• The firm that acquires the fixed assets must operate in the same sector or carry out similar activities as the firm that closed down.
• The acquisition of corporate capital must be made during 2005.
• The new law was published in the official government gazette Diario Oficial de la Federacion on Tuesday.

Statistics:

• Only natural persons are eligible for the exemption.
• Workers must invest their unemployment compensation in social enterprises during 2005 to qualify for the exemption.
• The exemption applies only to investments made in 2005.

Sources:

• El Universal
• Corporate Mexico by Internet Securities, Inc. via COMTEX
• Diario Oficial de la Federacion
• Article 25 of the Mexican Constitution