investing in higher education in mexico
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- 1. INVESTING IN HIGHER EDUCATION IN MEXICO
Raul R. Legaspi
March 2010
2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. PUBLIC / PRIVATE HIGHER
EDUCATION ENROLLMENT
14. Foreigninvestment* La Jornada Mxico City saturday 10 july
2004
More than US$34 million related to the sale of 80 % of the Valle de
Mexico University added up to 40 MD foreign investment in higher
education from 1994 to 2003.
UNAM researcher urges authorities to discuss about the meaning and
scope of a normative renewal that updates concerning legislation to
the University cycle.
15. KEY PLAYERS IN MEXICOS HIGHER EDUCATION SECTOR
16. THE 10 BEST UNIVERSITIES IN MEXICO ACCORDING TO GUA
UNIVERSITARIA 2009, DE SELECCIONES DEL READER'S DIGEST
1) Universidad Nacional Autnoma de Mxico (UNAM)
2) Instituto Tecnolgico y de Estudios Superiores de Monterrey
(ITESM)
3) Instituto Politcnico Nacional (IPN)
4) Universidad Iberoamericana (UIA)
5) Instituto Tecnolgico Autnomo de Mxico (ITAM)
6) Universidad de Anhuac
7) Universidad del Valle de Mxico (UVM)
8) Universidad Autnoma Metropolitana (UAM)
9) Universidad de Guadalajara (UdeG)
10)Universidad Autnoma de Nuevo Len (UANL)
17. ENCUESTA LAS MEJORES UNIVERSIDADES 2009, REFORMA
NEWSPAPER
THE BEST UNDERGRADUATE PROGRAMS IN MEXICO ACCORDING TO
18. 19. THE 10 BEST HIGHER EDUCATION INSTITUTIONS IN MEXICO
ACCORDING TO UNIVERSIDADES 09, EL UNIVERSAL NEWSPAPER
Universidad Nacional Autnoma de Mxico (UNAM)
Universidad Autnoma Metropolitana (UAM)
Instituto Tecnolgico Autnomo de Mxico (ITAM)
Universidad Autnoma del Estado de Mxico (UAEMEX)
Universidad Autnoma de Nuevo Len (UANL)
Universidad e Guadalajara (UdeG)
Instituto Tecnolgico de Estudios Superiores de Occidente
(ITESO)
Instituto Politcnico Nacional (IPN)
Universidad Anhuac Mxico Norte
Instituto Tecnolgico de Toluca
20. Tuition comparisonS
21. HIGHEST TUITIONS- 4 YEAR UNDERGRADUATE PROGRAMS IN MEXICO
22. HIGHEST TUITIONS IN AMERICAN UNIVERSITIES
23. A BUSINESS PERSPECTIVE ON THE PRIVATE TERTIARY EDUCATION
SECTOREMBARGOED UNTIL 9.00 AM WEDNESDAY 16 SEPTEMBER 1998
NEW ZEALAND ASSOCIATION OF PRIVATE EDUCATION PROVIDERS
24. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
A stable macroeconomic environment which fosters certainty and
facilitates investment, including long-term investment;
25. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
An efficient labor market which provides strong incentives for
people to develop desirable work habits and to acquire education
and training;
An open immigration policy which facilitates the introduction of
new skills and promotes innovation;
26. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
A low level of government expenditure and taxes, the avoidance of
excessive regulation and a carefully designed welfare system. These
are necessary to limit perverse incentives which impair work habits
and discourage investment in human capital;
27. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
A reduction in the level of subsidies for tertiary education and a
review of the type of activities which are assisted so that any
subsidies that are provided are justified on valid public policy
grounds.
28. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
This would eliminate the bias toward off-job education and
training, improve the effectiveness of spending on formal education
and training and reduce the tax burden;
29. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
A reduction in barriers to entry into, and exit from, the education
industry which would improve the efficiency of the provision of
education;
The adoption of private ownership arrangements; and
30. POLICIES REQUIRED TO ENCOURAGE APPROPRIATE INVESTMENT IN
TERTIARY EDUCATION
The removal of preferential treatment for any state entities that
are retained and the introduction of governance arrangements which
would facilitate more effective decision making and improve their
performance substantially.
31. HIGHER EDUCATION IN MEXICO
Higher Education has four different categories:
(1) universities, consisting of four-year college and university
programs called the licenciatura (Mexico: a country study,
1996);
32. HIGHER EDUCATION IN MEXICO
(2) technical institutes, offering a three-year program in
engineering and management fields;
(3) teacher-training colleges, offering bachelor degrees in the
areas of pre-school, primary school, secondary, and special and
physical education; and
(4) technological universities, offering two-year programs that
prepare students to be Higher University Technicians (SEP,
1999).
33. HIGHER EDUCATION IN MEXICO
Total higher education enrollment reached 6 percent of total
student enrollment in Mexico during the 1998-99 cycle.
Institutions of higher education in Mexico may be either public or
private.
However, there are many more public institutions than there are
private ones, and the former also tend to have much larger
enrollments.
34. HIGHER EDUCATION IN MEXICO
Each state has at least one public university, and the larger
universities have campuses in different cities (Husn and
Postlethwaite, 1994).
35. HIGHER EDUCATION IN MEXICO
The National Autonomous University in Mexico (Universidad
NacionalAutnoma de Mxico, UNAM) is located in Mexico City and is
the largest public university, with over 100,000 students.
Institutions of higher education also offer graduate studies and
doctoral programs.
36. HIGHER EDUCATION IN MEXICO
In the 1998-99 school year, approximately 122,000 students enrolled
in graduate studies in Mexico. However, it is more common for
students to pursue their graduate studies outside Mexico (Husn and
Postlethwaite, 1994).
37. School Governance and Finance
GovernanceUnder the General Education Law, the federal government,
through the Ministry of Education (SEP) is responsible for all
normative and policy-making functions in education,
including:
Formulating study plans and curricula for primary, lower-secondary,
and teacher-training education;
Authorizing teaching materials for basic education and
teacher-training;
Implementing the free textbook program for primary education;
38. School Governance and Finance
Establishing general evaluation guidelines for the national
education system;
Maintaining programs such as teacher in-service training, literacy
programs, and programs to reduce inequalities among the regions in
Mexico; and
Determining the school calendar for primary, lower secondary, and
teacher education.
39. School Governance and Finance
SEP also is responsible for all education matter within the Federal
District.
40. School Governance and Finance
Finance.
The Federal Expenditure Budget (PEF) allocates national resources
to education through SEP.
Since the highest volume of students is concentrated in the basic
education system, the majority of monetary resources are allocated
to basic education.
41. School Governance and Finance
In 1999, it was estimated that approximately 65 percent of the
national education budget would be allotted to basic education,
about 10 percent to upper-secondary education, and about 15 percent
to higher education (SEP, 1999).
Disparities in resources for basic education are evident between
urban and rural areas.
42. Regulatorysystemforprivatefor-profithighereducation
43. LABOR LAW
Labor law is highly regulated in Mexico. The Mexican Federal Labor
Law (FLL) regulates employment standards for all employees in
Mexico.
Employees must be paid the minimum wage set by the National Wage
Commission.
44. LABOR LAW
The minimum wage differs, depending on which economic region an
employee works in.
As well, hours worked over 48 hours per week are considered
overtime and must be paid for by stipulated overtime pay.
Employee dismissal is also governed by the FLL and the amount of
severance pay required is legislated.
45. LABOR LAW
Mandatory employee benefits include:
Profit sharing
Year end bonus
Nine days of paid holidays
Vacation days premiums
Training and maternity leave
Retirement Savings System
Federal Workers Housing Fund (INFONAVIT) contribution
46. LABOR LAW
Employers must register with the Mexican Social Security Institute
and must make social security contributions, along with an employee
contribution withheld from salary.
Finally, Mexican law allows any firm of more than 20 employees the
right to unionize.
47. TAXES
The majority of taxes paid by businesses operating in Mexico are
federal taxes, income taxes, value added taxes and payroll
taxes.
The federal corporate tax rate is currently 34% and is paid on
worldwide net income.
There is no withholding tax on dividends. Mexico has a Value Added
Tax (IVA) on all purchases and services in Mexico of 16%.
48. REGULATION OF BUSINESS ACTIVITIES
The sectors in which foreigners can do business are regulated by
the Foreign Investment Law of Mexico.
49. REGULATION OF BUSINESS ACTIVITIES
The Investment Law divides the Mexican economy into "classified"
and "unclassified" economic activities.
50. REGULATION OF BUSINESS ACTIVITIES
"Unclassified activities" are economic sectors of the Mexican
economy which do not prohibit or limit the amount of foreign
ownership in individual businesses operating in those
sectors.
Approximately two-thirds of the Mexican economy is
unclassified.
51. REGULATIONS ON FOREIGN INVESTMENT
Article 4th
Foreign investment may participate in any proportion in the capital
of Mexican societies, acquire fixed assets, enter new fields of
economic activity, manufacture new product lines, open and operate
establishments, and expand or relocate existing ones except by the
provisions of this law.
Article 5
Are reserved exclusively to the State functions to determine the
laws in the following strategic areas: does not include
education.
52. REGULATIONS ON FOREIGN INVESTMENT
Article 6
The economic activities and companies listed below, are reserved
exclusively to Mexicans or Mexican societies with opt-out of
foreigners: does not include education.
Article 7th.
in economic activities and societies listed below foreign
investment may participate in the following percentages: does not
include education.
53. Taxes in Mexico
byMexicoData On-Line
54. MAIN TAXES
The Mexican tax system has been subjected to comprehensive tax
reform legislation, enacted principally in 1986 and 1988. The
dramatic changes are an attempt to make it compatible with the tax
systems of Mexico's most important trading and investment partners
and with those of countries competing with Mexico for foreign
investment.
The maintaxes payable by individuals and by corporations operating
in Mexico and, in certain cases, by foreign companies, are those
levied by the federal government. State and municipal governments
have more limited tax powers and are not authorized to levy general
corporate income taxes; some states tax employers on salaries and
professional fees paid by them.
55. The main taxes
Federal Taxes
Taxes on income, including a minimum tax based on assets
held;
Value-added tax;
56. The main taxes
Import and export taxes; and
Payroll taxes, principally the 1% percent tax on salaries, social
security and contributions to the National Workers Housing
Fund.
There are a number of special federal taxes, such as excise taxes
on the mining industry and on a few specific products and services,
such as alcoholic beverages, cigarettes, gasoline, telephone
service, automobiles, etc.
57. Local Taxes
On real property;
On salaries (payable by the employer); and
On acquisition of real property.
58. CLASSES OF TAXPAYERS
Tax payers are divided into four main groups, for which, in
addition to the rules of general application, separate sets of
rules are provided as follows:
59. CLASSES OF TAXPAYERS
Resident Corporations and Other Associations Taxable as
Corporations.
Resident corporations,
Permanent establishments and
60. CLASSES OF TAXPAYERS
Fixed Bases" of operations of non-commercial activities of foreign
corporations and
All entities other than those associations specifically designated
as non-profit organizations,
Will be taxed in the same manner and under the same rules
applicable to resident corporations discussed below in greater
detail.
61. CLASSES OF TAXPAYERS
Resident Individuals
Residents of Mexico, irrespective of nationality, are subject to
Mexican taxation on their worldwide income of all types which must
be included in an annual personal income tax return.
Special treatment is given to capital gains, domestic interest and
dividend income, at a graduated scale of rates reaching 35%.
62. CLASSES OF TAXPAYERS
Non-Resident Corporations and Individuals
Non-residents are taxed only on their Mexican source income,
63. CLASSES OF TAXPAYERS
Usually at flat rates applied separately to different types of
gross income without deductions.
However, under special rules they may elect to be taxed at higher
rates on net taxable profits from sales of real property or shares
or on short-term construction, installation, erection and similar
work.
No overall annual return is required of non-residents.
64. CLASSES OF TAXPAYERS
Non-residents may be considered to have a permanent establishment
or a fixed base of operations for income tax purposes in Mexico
under certain circumstances.
65. CLASSES OF TAXPAYERS
In these cases, the permanent establishments, or fixed bases, are
taxed in the same way as duly registered branches of foreign
corporations, basically following the rules for resident
corporations.
66. CLASSES OF TAXPAYERS
Non-Profit Organizations
Under the law, a limited number of civil societies and associations
that are specifically designated as non-profit organizations, as
well as certain cooperatives, are considered as
non-taxpayers,
67. CLASSES OF TAXPAYERS
Although they are required to file annual information returns to
determine their net excess of income over expenses.
Consequently, there are no "exempt" organizations.
68. TAXES ON CORPORATE INCOME
69. Federal Income Tax
The federal corporate income tax rate is 35%. Provisions designed
to recognize the effects of inflation for tax purposes in the areas
of monetary assets and liabilities (monetary correction),
inventories and depreciable assets have been incorporated in the
law as a consequence of high inflation rates in the past.
70. Federal Income Tax
Once a corporation has paid its income tax, after-tax earnings may
be distributed to the shareholders without any further tax.
However, if the corporation makes a distribution out of earnings
that for any reason have not been subject to corporate income tax,
e.g., book earnings not yet recognized for tax purposes, it will
have to pay a corporate tax of 35% out of these distributed
earnings.
71. Minimum Tax
An asset tax is payable at the rate of 2% of the value of the
assets of corporations, unincorporated businesses, organizations of
a civil nature not specifically excepted, and branches or other
permanent establishments of foreign persons.
It supplements the federal income tax, i.e., it will only be
payable and increase the overall tax burden if it exceeds the
regular income tax due.
72. Minimum Tax
In other words, an amount equal to the taxpayer's regular income
tax is credited against his minimum 2% assets tax due for the
current year and the five preceding years.
Any unused carry back will be indexed for inflation during the
carry back period. Thus, the taxpayer's combined tax burden will
only be affected if the taxpayer pays little or no federal income
tax over an extended period.
73. State Taxes
There are no state taxes on corporate net income.
74. OTHER TAXES
75. Value-Added Tax
A value-added tax (VAT) at the general rate of 10% is payable on
sales of goods and rendering of services, rents, and imports of
goods and services. Certain medicines and basic foods have been
temporarily zero-rated for 1992.
76. Value-Added Tax
The principal transactions exempt from the tax include sales of
land, books, credit instruments (including equity shares),
residential construction and materials therefore, financial and
medical services (except for interest charged by issuers of credit
cards), education and rentals of residential property.
Taxes paid by business enterprises on their purchases may usually
be credited against their tax due on their own sales; the latter
tax must be charged to all customers. Excess credits can be
refunded.
77. Value-Added Tax
The 0% rate of tax is applicable to a substantial number of
transactions, which in general terms means that no VAT is payable
thereon, while amounts paid on purchases of materials, supplies and
services can be recovered through a credit against the entity's VAT
due or by direct refund.
Included in this treatment are the export of goods and services;
sales to maquiladoras (in-bond assembly plants) or to companies
solely engaged in exporting goods, which are treated as indirect
exports; the sale of certain basic foodstuffs, agricultural goods,
services and rentals; and other minor transactions.
78. Compulsory Profit-Sharing
Every business concern having employees is required to distribute a
portion of its annual profits among all employees, regardless of
its form of organization.
The amount distributable to the employees in most cases amounts to
10% of taxable income, adjusted to eliminate inflation-related
income or deductions and increased by dividend income, which is not
included in taxable income. Special rules apply to a limited number
of specific businesses.
79. CORPORATE INCOME TAX
Tax Year
Taxpayers are required to use the calendar year for income tax
purposes. Newly formed corporations will have a short taxable year
from the date of incorporation to December 31 of that year.
Similarly, existing corporations will have a short taxable year in
the year in which liquidation procedures commence.
80. CORPORATE INCOME TAX
Corporations and Shareholders
The income tax system seeks to tax corporate earnings only once, at
the corporate level. However, a 35% tax is imposed on the
corporation on distributions which for any reason represent income
that has not been subject to the corporate income tax.
It is important to note that not taxing dividend distributions
eliminates double taxation at the shareholder level and thus
significantly reduces the overall tax burden of domestic or foreign
investors' return on investment.
81. REGULATION OF BUSINESS ACTIVITIES:
"Classified activities" are sectors of the Mexican economy in which
the Investment Law prohibits the amount of foreign ownership
permitted in a business operating in those activities.
82. REGULATION OF BUSINESS ACTIVITIES
Non-Mexicans who wish to be involved in the classified activities,
where permitted, may have to obtain government approval.
For further information please contact the Secretariat of Economy
office in your area or in Mexico.
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