Mexico to levy zero AVT rate on congress, conventions

Mexico, one of the world’s top tourist destinations, is equally becoming a major congress and convention planner in a market segment that’s leapfrogging everywhere under the sun and is destined to get a big boost in the Mexican market following the drop of the Additional Value Tax (AVT) beginning in 2004.

The Mexican Congress passed an amendment to provision 29 of the country’s Additional Value Tax Act scheduled to go into full effect in 2004 with a zero AVT rate on all congress, conventions, fairs and tradeshows to be held in the nation.

The congress and convention market has grown at a white-heat pace all over the world and it now holds over a million events every year with roughly 80 million attendants and $40 billion worth of revenues.

Mexico has not been sitting on the sidelines and has turned out to be an aggressive destination for business travelers. In 2001 alone, Mexico held 7,150 congress and conventions with a grand total of 1,524,500 attendants (79 percent of nationals and 21 percent of foreigners). The yearly turnout average hovered around 200 people in national events and hoffered in the neighborhood of 290 attendants with a 3.6 nights per stay in the case of international gatherings.

Congress and conventions account for 2.5 percent of all tourist activities –both national and international- with a figure that tallies $1.5 billion. One of the major benefits generated by this particular segment includes an average spending per congress and convention attendant that peaks $686 for Mexicans and $925 for Americans, ruling out air transportation fares.

Aware of both the importance and potentials of business travel for the nation through conventions, congress, fairs, exhibits and related events, the Mexican government has cranked up a stimulus package to step up the country’s competitiveness in this market segment worldwide.

The legislative amendment will slash taxes on services provided by hotel companies –such as exports- and therefore it levies no AVT taxes on foreign tourists traveling to the country to exclusively take part in events and meetings.

The list of tax-exempt services (AVT only) beginning in 2004 includes:

a) Lodging

b) Round-trip transportation between the hotel and the airport, ground station or seaport.

c) Food and beverages, as well as complementary services offered by the hotel.