11/07/08

Mexico tax exemption scheme garners criticism

The tax exemption was intended for companies investing in research Copyright: Flickr/tk-link

By: Arturo Barba

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<div id="article-introduction">
<h1>Mexico tax exemption scheme garners criticism</h1>
<h4>By: Arturo Barba</h4>
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<p><span>[MEXICO CITY] A Mexican tax exemption scheme rewarding companies for investing in Mexican research and development (R&D) has been criticised for giving large sums of money to multinational — and sometimes nonscientific — companies. </span></p>
<p><span>The Program of Tax Exemptions (PTE), created in 2002 by the National Council of Science and Technology (CONACyT), aims to stimulate investment in scientific research and innovation by giving tax exemptions to companies that invest in Mexican R&D.</span></p>
<p><span>But the application of the exemption has been criticised by organisations such as the Mexican Academy of Sciences (AMC).</span></p>
<p><span>Under the scheme, companies are given back 30 per cent of the total investment in research, technology development, scientific formation and innovation. </span></p>
<p><span>According to a report by CONACyT published in the Official Federation Journal in March 2008, multinational companies accounted for 60 per cent of the US$450 million dollars in tax exemptions in 2007.</span></p>
<p><span>But many companies that received this incentive are not involved in science and technology, José Luis Fernandez Zayas, ex-coordinator of the Scientific and Technological Consultative Forum and researcher at the National Autonomous University of Mexico, told SciDev.Net.</span></p>
<p><span>The AMC will release a study of tax exemption to promote scientific research and technology in Mexico in the next month. The document indicates that many multinational companies receive special treatment that doesn’t necessarily translate into contributions to the country’s innovation.</span></p>
<p><span>The president of the AMC, Rosaura Ruiz, told <em>La Jornada</em> newspaper that resources channeled through the PTE are in some cases devoted to activities that cannot necessarily be considered as science and technology or innovation, and in many cases companies use this programme simply as tax evasion.</span></p>
<p><span>Francisco Castellón, president of the Senatorial Science and Technology Commission, told SciDev.Net that the PTE must be used to create a specific incentive to micro, small and medium companies that develop joint projects with academic institutions, push the formation of human resources, generate patents or create research centers in the country.</span></p>
<p><span>Castellón suggests audit, and sanctions on those who don’t fulfill the requirements to generate scientific and technological innovation. </span></p>
<p><span>"The program has many problems but we can improve; the program will get better," Leonardo Rios, technological director of CONACyT and who is responsible for the PTE, told SciDev.Net.</span></p>

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<p>This article was originally published on <a href="https://www.scidev.net" target="_blank">SciDev.Net</a>. Read the <a href="https://www.scidev.net/global/news/mexico-tax-exemption-scheme-garners-criticism/" target="_blank">original article</a>.</p>
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[MEXICO CITY] A Mexican tax exemption scheme rewarding companies for investing in Mexican research and development (R&D) has been criticised for giving large sums of money to multinational — and sometimes nonscientific — companies.

The Program of Tax Exemptions (PTE), created in 2002 by the National Council of Science and Technology (CONACyT), aims to stimulate investment in scientific research and innovation by giving tax exemptions to companies that invest in Mexican R&D.

But the application of the exemption has been criticised by organisations such as the Mexican Academy of Sciences (AMC).

Under the scheme, companies are given back 30 per cent of the total investment in research, technology development, scientific formation and innovation.

According to a report by CONACyT published in the Official Federation Journal in March 2008, multinational companies accounted for 60 per cent of the US$450 million dollars in tax exemptions in 2007.

But many companies that received this incentive are not involved in science and technology, José Luis Fernandez Zayas, ex-coordinator of the Scientific and Technological Consultative Forum and researcher at the National Autonomous University of Mexico, told SciDev.Net.

The AMC will release a study of tax exemption to promote scientific research and technology in Mexico in the next month. The document indicates that many multinational companies receive special treatment that doesn’t necessarily translate into contributions to the country’s innovation.

The president of the AMC, Rosaura Ruiz, told La Jornada newspaper that resources channeled through the PTE are in some cases devoted to activities that cannot necessarily be considered as science and technology or innovation, and in many cases companies use this programme simply as tax evasion.

Francisco Castellón, president of the Senatorial Science and Technology Commission, told SciDev.Net that the PTE must be used to create a specific incentive to micro, small and medium companies that develop joint projects with academic institutions, push the formation of human resources, generate patents or create research centers in the country.

Castellón suggests audit, and sanctions on those who don’t fulfill the requirements to generate scientific and technological innovation.

"The program has many problems but we can improve; the program will get better," Leonardo Rios, technological director of CONACyT and who is responsible for the PTE, told SciDev.Net.