In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
Corporate tax | 30% |
Agriculture, livestock, fishing, and forestry activities | 30% reduction of their tax liability |
Gains on securities are included in regular taxable income.
When stocks issued by Mexican companies, securities that exclusively represent these shares, stocks issued by foreign companies listed on the Mexican stock market, and derivative financial operations based on stock indexes or the aforementioned shares are sold in recognized stock or derivative markets according to the Securities Market Law, the resulting capital gains will be subject to a 10% income tax rate.
For the purpose of calculating the taxable gain of real estate, the cost basis of the land and buildings may be increased for tax purposes, based on the duration of asset holding, through the application of inflation adjustment factors to the net undepreciated balance. Non-residents who choose to pay tax on net income by appointing a legal representative in Mexico are subject to similar rules, with the net gain taxed at a rate of 35% (or a lower rate as specified in a treaty). If not, the non-resident is subject to a final withholding tax (WHT) of 25% on the gross income. Gains or losses from the disposal of machinery, equipment, and other fixed assets are also determined by adjusting the basis of these assets through the application of inflation factors to the net undepreciated balance.
Start-up expenditure incurred prior to the commencement of business may be amortised at the yearly rate of 10%, after applying the adjustment factors. The deduction of charitable contributions is limited to 7% of the taxable income of the previous year.
As a general rule, interest expenses can be considered deductible expenses provided that certain conditions are met. These conditions include investing the principal in the main activity of the Mexican taxpayer, fulfilling withholding obligations, submitting informative returns that disclose information about the loan and transactions with related parties, complying with thin capitalisation rules (which require a 3:1 debt-to-equity ratio), ensuring that the transaction is carried out at arm's length, and ensuring that the interest payment does not meet the criteria of a deemed dividend. Furthermore, a limitation applies to net interest (i.e. taxable accrued interest minus deductible interest) that exceeds 30% of an adjusted taxable profit amount. It is important to note that this limitation only applies to taxpayers whose deductible accrued interest exceeds MXN 20 million, which must be determined on a Mexican group basis or a related party basis.
R&D expenditure (including investment in R&D) gives rise to a 30% tax credit. The tax credit is equal to current-year R&D expenses in excess of the average R&D expenses incurred in the previous three years.
For payments related to technical assistance, the transfer of technology, or royalties to be considered deductible, they must be made directly to companies that possess the necessary technical expertise to provide the relevant service. If payments are made to foreign affiliates, they will only be considered deductible if they adhere to the arm's-length principle.
Net operating losses can be carried forward up to 10 years, subject to adjustments for inflation. The carryback of losses is not permitted.
Non-deductible items include penalties, unauthorised donations, contingencies, indemnities, goodwill, exempt salaries, etc.
Companies engaged in oil exploration and production are subject to a special tax regime as set out in the Hydrocarbons Revenue Law.
Social security contributions are based on the daily salary plus any other compensation paid to the employee, with rates varying according to the base salary of their Mexican employees and the type of concepts for which the compensation is given to the employee (ranging from 15% to 25%). For a low-risk company, the employer's maximum annual contribution is MXN 195,235. However, this limit may be higher depending on the employer's occupational risk premium, which is determined by the employer's activity. These maximum contributions apply only to employees who earn more than MXN 940,800 per year (or MXN 78,400 per month).
The acquisition of new vehicles is subject to taxation, while the different states may impose a tax on the ownership of vehicles. Mexico does not levy stamp duties.
Mexico | Latin America & Caribbean | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 6.0 | 28.2 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 240.5 | 327.5 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 55.1 | 46.8 | 36.6 | 48.8 |
Source: The World Bank - Doing Business, Latest data available.
- The balance sheet, which reflects the financial situation of the enterprise and provides information about the assets, liabilities and capital on a particular date (the last day of the fiscal year).
- The profit and losses report, reflects the income, expenses, loss and profit obtained during that particular period (typically each trimester or fiscal year).
Annual Tax Rates for Resident Individuals | Vary from 1.92% to 35% (2023) |
from MXN 1 to 8,952.49 | 1.92% |
from MXN 8,952.50 to 75,984.55 | 6.4% |
from MXN 75,984.56 to 133,536.07 | 10.88% |
from MXN 133,536.08 to 155,229.80 | 16% |
from MXN 155,229.81 to 185,852.57 | 17.92% |
from MXN 185,852.58 to 374,837.88 | 21.36% |
from MXN 374,837.89 to 590,795.99 | 23.52% |
from MXN 590,796.00 to 1,127,926.84 | 30% |
from MXN 1,127,926.85 to 1,503,902.46 | 32% |
from MXN 1,503,902.47 to 4,511,707.37 | 34% |
over MXN 4,511,707.38 | 35% |
Business owners and independent professionals can generally enjoy the same deductions as corporations.
More information regarding deductions can be found on the Mexican Federal Tax Administration website.
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Latest Update: November 2023