Individuals or entities (companies, associations, or partnerships, among others) that are governed by the legislation of another country in light of their nationality, domicile, residence, seat of operation, and other criteria, shall be deemed foreign nationals for taxation purposes. In order to explain the applicable tax regime, foreign nationals are distinguished as residents in Mexico or residents abroad.
The tax legislation deems the following persons as residents in Mexico:
Nationals and foreign individuals who have established their residence in Mexico.
When they have a residence in another country, they shall be deemed as residents in Mexico if they have their center of vital interests in the country; i. e., that more than 50% of the annual income of an individual is derived from a source of wealth located in Mexico, or, that the center of their professional activities is located in Mexico, among other cases.
Individuals with Mexican nationality that are State officers or employees thereof, even when the center of their vital interests is located abroad.
Entities (companies, associations or partnerships, among others) that have been incorporated pursuant to Mexican law, as well as those that have established in Mexico their main place of business or the seat of their management.
There are differents tax sheme for foreigners, but depends of the type of business used, through the employment of a subordinate agent, the establishment of a Mexican company or the acquisition of shares in an existing Mexican company. The use of any of these methods will create a permanent establishment and will have the following tax regulations:
Income Tax (Impuesto Sobre la Renta, ISR)
A corporation tax must be paid annually on the taxable profits of the company. Such gains are calculated by deducting certain allowable expenses from total cumulative income. Most of the company's revenues are considered cumulative for income tax purposes at the time the invoices (CFDI) are issued or when goods or services are delivered to the buyer if no invoice is issued. Basically, allowable deductions are all discounts and / or expenses "strictly necessary" for the operation of the business.
With the exception of the first year of operations, all Mexican corporations must file their income taxes through monthly provisional payments. These interim payments will be credited against annual tax returns. The rate of the income tax in Mexico is 30% for companies, and 35% for phisical persons.
Value Added Tax (Impuesto al Valor Agregado, IVA)
When the Mexican company transfers or leases goods or services in Mexico, it will be obliged to pay Value Added Tax (VAT). This tax is 16 percent of the price of the goods or services and can be transferred to
customers by including the tax on your billing invoices. In addition, if such goods and services are exported from Mexico, VAT is zero percent.
Special Tax on Production and Services (Impuesto Special sobre Productos y Servicios, I.E.P.S.)
Collection in Mexico of the Special Tax on Production and Services (IEPS) to public telecommunications networks. The IEPS to telecommunications, of 3%, applies since 2010 to all services related to public networks such as fixed telephony, mobile telephony and pay television. The data transmission services (internet) are exempt from IEPS.
Payroll taxes (Retenciones del ISR por sueldos y salarios, Cuotas de Seguridad Social, y el Impuesto Estatal para la Nómina)
The company is subject to a state state payroll tax, at a rate that depends on the worker's salary. The federal government also imposes on corporations with social security contributions, which must be paid by the employer for illness, maternity, old age, death, child care and retirement. The employer must also contribute a fee from the Worker's Housing Institute for each worker's salary. Payroll taxes and fees are deductible for income tax purposes.
In addition to the tax provisions discussed above, there are also several provisions under Mexican law and different tax treaties that apply specifically to foreign companies earning income in Mexico. These provisions cover areas such as withholding obligations in front of the tax authorities of each country, available tax credits and taxes on dividends and royalties.
AS Consulting Group es una firma mexicana fundada en 1991 con el objetivo de brindar soluciones a los problemas contables, fiscales, legales y financieros de las pequeñas y medianas empresas en nuestro paÃs.
SMS Latinoamérica es una red de Firmas profesionales cuyos miembros son entidades legales separadas e independientes operando bajo su nombre particular e identificándose como miembros de SMS Latinoamérica. Cada una de las Firmas miembro actúa en un área geográfica especÃfica y brinda servicios profesionales sujetos a las leyes y regulaciones profesionales del paÃs o paÃses en los que actúa. SMS Latinoamérica no brinda servicios a clientes y no es responsable por los actos u omisiones de cualquiera de sus firmas miembro. Las Firmas miembro son entidades legales separadas e independientes sin vinculación o intervención alguna sobre las demás Firmas miembro.
Esta publicación sólo contiene información general de carácter informativo y ni Luis Javier Arreguin, AS Consultores, ASCG , AS Consulting Group, Arreguin Sánchez y Asociados, SMS Latinoamérica, ni sus firmas miembro, ni ninguna de sus respectivas afiliadas, presta asesorÃa o servicios por medio de esta publicación. Antes de tomar cualquier decisión o medida que pueda afectar sus finanzas o negocio, debe consultar a un asesor profesional calificado. Ninguna entidad, será responsable de pérdidas que pudiera sufrir cualquier persona o entidad que consulte esta publicación.