CAINTRA generates proposals to aid SMEs

mayo 8, 2019

Small and medium enterprises are a fundamental part of our country's economy. In general, they represent 99% of the economic units in Mexico, employ 74% of the economically active population, contribute 22% of private investment in Mexico and make the purchase of more than 1.9 billion pesos in inputs, generating an important multiplier of the economy.

However, SMEs in our country have not been a priority for the different levels of government, so support for their growth has been scarce in recent years. For example, this segment of companies requires financing for their daily operation, to grow and adopt new technologies. However, only 20.4% of loans in Mexico to the private sector are granted to SMEs. The situation contrasts with countries such as South Korea, Colombia or Portugal, where 74%, 49% and 80% of loans are for smaller companies, respectively.

Likewise, SMEs face a heavy regulatory and fiscal burden, similar to that of a large company. In Mexico, SMEs spend more than 286 hours a year to pay their taxes, when in countries such as China or India the load is 20% lower. Given this situation, it is not surprising that only 0.55% of these companies in Mexico export or that only 4.5% develop a patent.

For this reason, in CAINTRA Nuevo León we have placed the support to micro, small and medium enterprises as our main point of attention. For the Chamber, the boost to the SMEs translates into the strengthening of value chains and the economy, the creation of jobs and the generation of greater social welfare for the population. Our agenda with the Mexican government will focus on two points: the first of them, in reducing administrative friction between companies and government, mainly on the fiscal issue; the second point will concentrate on generating the resources for their development. Below, I will develop these points in more detail:

Regarding the tax issue, there are currently tax schemes that generate many facilities for SMEs. For example, the Fiscal Incorporation Regime allows benefits in the payment of taxes as preferential rates and bi-monthly declarations; or the My Accounting System of the SAT (Mexico’s internal revenue service) that facilitates taxation by automating accounting and saving SMEs time to calculate their taxes. Unfortunately, these benefits only apply to companies of up to 5 million pesos in annual income, which leaves out more than 1 million 600 thousand SMEs that could be benefited by these schemes.

CAINTRA proposes to Mexico’s Government to maintain these tax schemes and increase its scope to companies that enter up to 250 million pesos per year, which correspond to the SMEs in accordance with the current definition in Mexico.

Also in the fiscal issue, since the 2013 reform, the statements that a small and medium-sized company have multiplied. Although it had been possible to reach 127 declarations a year with efforts of the Chamber, the fiscal dispositions have caused an increase in these, reaching 169 in this year.

Under this situation, companies make about 20 different declarations in a year, 11 of which have a monthly periodicity. Among these are those related to ISR, VAT, IMSS, electronic accounting, payroll, among others. If we change the frequency of these declarations on a quarterly basis, we would be reducing the burden of the companies by up to 52%.

For this reason, the Chamber restates its proposal to reduce the frequency of monthly to quarterly declarations. The magnitude of the release of resources in this proposal is considerable for a micro or small company, which devotes about 36 business days to perform their accounting. If the proposal of the Chamber materializes, the companies would only spend half of that time.

Regarding the issue of resources, the budget for this year for SMEs support has practically disappeared, with an 86% reduction in it. Without resources, SMEs will lack programs to export, improve their competitiveness, train their staff or find financing in conditions that are more accessible. For example, NAFIN productive chains programs will be affected, which provided companies with liquidity. Likewise, training programs in lean manufacturing or adoption of technologies from the CAINTRA Liaison Center and several other chambers and agencies will have a smaller scope. The Chamber will propose to the federal authorities the return of resources for this segment of companies, prioritizing resources for their growth and financing.

We consider that these initiatives that the Chamber puts on the table are of great benefit for companies by reducing their administrative burden and providing it with resources for its development. As CAINTRA we are arranging meetings with the authorities to promote the proposals and position them in the scope of action of the Mexican government. We are sure that we will be good listeners and we will be working for the benefit of the micro, small and medium enterprises of our country.