Mexico

Tax rates 2012 Mexico

Corporate tax

Rate

The standard corporate tax rate of Mexico is 30 %. This rate is applicable to business profits in general.

There is a mandatory profit sharing rule which means 10 % of net after-tax profits are to be distributed among employees, no later than May the following year. This profit sharing rule is not a tax, but is mandatory for all corporations according to Mexican law.

Taxation of dividends

Dividends received by a resident company from another resident company are tax exempt. Dividends received from a foreign company may be subject to corporate tax. If dividends are not payed from the

Capital gains

There is no special tax treatment on capital gains. Taxable profits are calculated by deducting the tax cost from the selling price. The use of capital losses is restricted in some cases.

Losses

Losses may be carried forward for 10 years. Losses are also allowed to be inflation-adjusted. Losses are not allowed to be carried backwards.

Withholding tax

There is no withholding tax on dividends.

In general the witholding tax rate on interest is 30 %. Interest payments to foreign banks are subject to a 4,9 % withholding tax, if they are registered as banks in Mexico and residents of tax treaty countries. Otherwise the rate is 10 % unless a tax treaty exists that reduces the rate. Financial leases and business enterprises that make payments must withold 15 % tax on interest portion of lease payments.

Royalties to non-residents are subject to a 25 %- 30 % withholding tax, unless there is a tax treaty present that reduces or eliminates such a tax.

Technical service fees are subject to a 25 % withholding tax.

 

Individual tax

General

Individuals are taxed on their worldwide income. Nonresidents are just taxed on their income from Mexican sources. To be considered tax-resident in Mexico an individual must have either a permanent home in Mexico or have a center of vital economic interest located in Mexico.

Taxable income

Income is taxed under a scheduled system. Profits coming from an individual carrying out a specific trade or profession are taxed in the same way as company profits in general.

Rates

Progressive tax rates is levied on income tax, which can be of up to 30 % for 2012 (29 % for 2013 and 28 % for 2014 onwards).

Capital Gains

Capital gains are taxed as income. Profits coming from the sale of publicly traded securities are tax exempt.

Deductions

Expenses that may be deducted from the tax base include medical expenses/medical insurance, mortgage interest, retirement annuities, funeral expenses and school transportation for children.

Real Estate

Municipal authorities levy a specific “rate” on the ownership of real property.

Net Worth Tax

There exist no net worth tax in Mexico.

Inheritance Tax

There is no inheritance tax in Mexico.

Social Security

Employed individuals contributes to the social security with a ceiling up to 25 times the daily minimum wage salary.

Employers contribute 2 % of payroll to a retirement fund and 5 % of payroll to a housing fund. The housing fund is to be added to the retirement fund if not used for a housing credit.

VAT

VAT applies to all sales of goods, services, leasing and imports. The VAT is 16 %.  At the borders the rate is 11 % and some other specific areas. Exports and qualifying imports of IMMEX supplies are subject to 0 % rate. Certain trasactions are also tax exempt.

 

Other

Tax year. Calendar year for both individuals as well as corporations.

Tax treaties. Mexico currently has more than 40 tax treaties.

Filing requirements. Monthly VAT filing within the first 17 days of the following month is employed.

Registration (for VAT purpose). All individuals that wish to credit VAT paid to vendors, suppliers or at the border. Nonresidents making supplies of goods and/or services in Mexico are also required to register.

 

Links

Tax authorities. Servicio de Administración Tributaria

Consulate

Local Tax Resources

Chamber of commerce

(Online realtor/stock exchange)