México: La fiscalidad

Consumption Taxes

Nature of the Tax: VAT (Value Added Tax) called "Impuesto al Valor Agregado - IVA"
Standard Rate: 16% - Value Added Tax Laws
Reduced Tax Rate: 11% for the activities of enterprises located in a frontier zone. Exports are subject to a rate of 0%, as well as basic foodstuffs, agricultural services related to the production of them and medicines.
Exclusion From Taxation: Articles exempt from VAT are: food products of primary needs, medicines, agricultural products, exports, etc. Also, the construction of residential dwellings and certain financial and insurance services, as well as medical and education services.
Method of Calculation, Declaration and Settlement: The calculation of the VAT you are accounted for can be figured out as follows: from the total amount you have charged your client, you can subtract the VAT amount transferred from your purveyors for your purchases and expenses and comply with these requirements:

- Expenses, purchases or investments can be deductible from income tax. If the expense or investment has a partial deduction, the VAT can only be reduced for the same proportion. - The VAT that has already been paid to the purveyors, for the same month on which the tax is being calculated and providing separate supporting documents.

A tax declaration must be done before the day 17 of the following month that corresponds to the payment's date. An additional annual declaration has to be done the year following the one on which the income was received. The legal entities with profit must present their declaration by Internet during the first three months of the following year.
Other Consumption Taxes: Special Production and Services Tax Law (applied to alcoholic beverages, elaborated tobacco, gasoline and diesel). Laws for New Automobiles.

Corporate Taxes

Tax Base For Resident and Foreign Companies

All legal entities that according to the Federal Tax Code are considered Mexican residents are taxed for worldwide income received, depending of their activity or social object, in any of the following regimes:

- Legal entities of general regimen
- Legal entities non-profit
- Legal entities of simplified regimen

Legal entities that are not residents, must pay taxes in Mexico when they earn an income from a source of wealth located in Mexican territory (income tax and flat rate corporate tax).

Tax Rate

Corporate tax	30%
A flat tax (IETU) has been set up. It represents the minimum corporate tax after all deductions.	17.5%

Tax Rate For Foreign Companies: Foreign enterprises established in Mexico are subject to the same tax system as the national enterprises. However, they profit from certain exemptions.
Capital Gains Taxation: A flat tax (IETU) has been set up. It represents the minimum corporate tax on capital gains. The rate is 17%.
Main Allowable Deductions and Tax Credit: The expenses for establishing a business can be deductible if they are backed up properly, some of them can be: real estate acquisition expenses, VAT, contributions to third parties, etc. For more information, consult the site of Mexican Federal Tax Administration
Other Corporate Taxes: For information on the other taxes levied on companies in Mexico, access Mexconnect.

Country Comparison For Corporate Taxation

	Mexico	Latin America & Caribbean	United States	Germany
Number of Payments of Taxes per Year	6.0	33.2	11.0	16.0
Time Taken For Administrative Formalities (Hours)	404.0	384.7	187.0	215.0
Total Share of Taxes (% of Profit)	50.5	48.0	46.8	48.2

Source: Doing Business - Last Available Data.

Individual Taxes

Tax Base For Residents and Non-Residents: Residents must pay taxes for their worldwide income, non-residents must pay only for income earned from Mexican sources.

Tax Rate

Rate imposed on an individual's income	Vary from 1.92% to 30%.
from MXN 1 to 5,953	1.92%
from MXN 5,954 to 50,525	6.40%
from MXN 50,526 to 88,793	10.88%
from MXN 88,794 to 103,218	16%
from MXN 103,219 to 123,580	17.92%
from MXN 123,581 to 249,243	21.36%
from MXN 249,244 to 342,842	23.52%
Over MXN 342,843	30%

Allowable Deductions and Tax Credit: There are several types of deductions attributed to taxpayers in Mexico. You can find out the nature of all the deductions by contacting Mexican Federal Tax Administration.
Special Expatriate Tax Regime: If a foreigner resides in Mexico for business purposes for more than 183 days per year, he can obtain a special tax rate, however there are no special deductions for expatriates.
Capital Tax Rate: There are no taxes on capital.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of financial agreements signed between Mexico and other countries, in order to avoid double taxation.

Withholding Taxes: Dividends: 0%, Interest: 4,9% / 30% / 40%, Royalties: 25% / 30%

Sources of Fiscal Information

Tax Authorities: Mexican Federal Tax Administration
Mexican Ministry of Finance
Other Domestic Resources: Ministry of Finances and Public Credit
Country Guides: International Guide for Business and Taxes in Mexico, by Deloitte.
2009 PKF Tax Guide

Learn more about Service Providers in Mexico on Globaltrade.net, the Directory for International Trade Service Providers.

Accounting Rules

Accounting System

Accounting Standards: The Accounting system used in Mexico is modern and international. It follows the same double ledger pattern, which is compatible with most of the European accounting systems. Mexican GAAP with incresing conformity to international standards.
Accounting Regulation Bodies: Mexican Council of Investigation and Development of Financial Information Standards
Accounting Law: The Principles of Accounting generally accepted include the standards of financial information put into effect on the bulletins issued by The Mexican Institute of Public Accountants and the standards of financial information issued by The Mexican Council of Investigation and Development of Financial Information Standards (CINIF)
Difference Between National and International Standards (IAS/IFRS): Between the international financial information standards and the Mexican financial information standards there is about 70% of compatibility. However, the Mexican Council of Investigation and Development of Financial Information Standards (CINIF) continues to change the forms with the object of making them totally compatible to the international standards before the end of 2011. For further information consult CINIF

Accounting News: Impuestum

Accounting Practices

Tax Year: The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting Reports: There are two essential structures:

- The balance sheet, which reflects the situation of the enterprise and provides the information about the assets, liabilities and capital on a particular date (the last day of the fiscal year).

- The profit and losses report, which shows the results of all financial activities of the enterprise in a given period of time, could be each trimester or each year. It reflects the income, expenses, loss and profit obtained during that particular period.
Publication Requirements: The balance sheet, the profit and loss account staments and the daily ledger are mandatory. Accounts are published annually.

Accountancy Profession

Accountants: The diploma of public accountant is required to practice the profession in the country. You can access the website of the Instituto Mexicano de Contadores Publicos, A.C.
Professional Accountancy Bodies: Mexican Institute of Public Accountants
School of Public Accountants of Mexico
Member of the International Federation of Accountants (IFAC): Yes

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