Friday, July 10, 2009

Do We Look Like We're Made of Money Part II

As most of us do, I take a brief look at our bank statements every month to ensure all the withdrawals and deposits are correct. Even though Nick is the financier by trade, I end up doing all our personal finances. Minus the frequent "service not available" messages, online banking here is trustworthy and useful. I can check our movements, pay bills, and most of the time, I can successfully transfer money between self-owned accounts and third-party accounts. And you can online bank in English with Banamex--something I find very helpful when dealing in financial matters. Something to consider if you need to open a bank account here.

Well, this week we've been counting our losses--first from our doormen and now from the government. I noticed a suspicious charge on our recent bank statement, and I really couldn't tell what it was because the charge was a mix of numbers and Spanish acronyms. Here is the actual line item: 

000000000164473 IDE RECAUD PER ACTU 164473 CARGO POR IDE AUT. 139764

Between forgetting and mustering up the courage to call the bank, I finally did to inquire about the charge. A sampling of our dialogue in my less-than-eloquent Spanish:

Me: Hello, I have a charge that I'd like more information about.

Operator: Can you read the charge off to me?

Me: (thinking to herself, "I hope this guy knows code.") It says IDE RECAUD PER ACTU

Operator: (sounding annoyed) That's an IDE charge. Any deposits over 25,000 pesos are subject to a 2% tax.

Me: (Brain rejecting this seemingly irrational explanation) Are you telling me that I'm being charged extra if I deposit more than 25,000 pesos in my account?

Basically, yes. In short, there is a tax called called IDE, short for "Impuesto a los Depósitos en Efectivo", or "Tax on Cash Deposits" in English. Beginning July 1, 2008, the government instated the IDE to increase tax revenue, and all cash deposits over 25,000 pesos (per month) are subject to a 2% tax. You can read more about it here in English. Here in Spanish.

Well, hell, if I knew this minute law, I might of just kept the money at home or deposited it in smaller increments. I never, ever, ever thought that I could be charged for depositing money into my bank account. I wonder how many people unknowingly fall victim to this insane tax law. 

Avoiding and ignoring laws here is second-nature, so I'm sure the only contributors to IDE are by first-time victims like me. After that, you smarten up and find ways around it. Anyway, on a lighter note, here are more ridiculous Mexican laws. And, let's not forget the rest of the world


  1. Alice,
    It isn't exactly an insane law. There are so many small businesses that are "cash only" who don't keep books that the government decided that the only way they could tax them at all is with this law. If they don't want to pay the tax they must keep their money under their mattress. That makes it hard for them to write checks or pay with bank transfers. When the law was put into effect it was well advertised and your bank should have warned you when you opened your account. One good thing is that bank transfers themselves aren't taxed, especially if money is wired to your account from out of the country. To get around this law if you are paid in cash (like many people are) you can divide your money and deposit it in different accounts at different banks. It is better to not keep all your eggs in one basket anyway.

  2. It's seems like a smart way to get cash only businesses to pay up, but it punishes everyone and only drives people to devise ways around it. Then you have to wonder whether it's a viable way to recover tax revenue.

    We weren't informed of IDE when we opened up our bank account, and I'm writing this loss off as another lesson of "living in a foreign country".

  3. Of course it is awful on regular people, but it has also a limit on how much you can deposit in a month, all added, so, even if you make smaller payments you could be taxed for overall monthly deposits.

    What we have done is use mostly transfers, we have so far been able to stay out of reach of the IDE. And of course we are heavily taxed vía or company.


  4. yes, I was also a victim of this tax...