Overview of tax system in Mexico
The tax system of Mexico has been reviewed and changed in 2014. And the main change is that cash tax (IDE) and singe tax (IETU) have been abolished. Regarding the singe tax, the function of IETU and income tax has been untied.
The main tax items in Mexico are as follows.
・ Business income tax
・ Personal income tax
・ Value added tax
・ Tariff tax
・ Production service tax
・ Salary tax
・ Property income tax
・ Property tax
・ Accommodation tax
Characteristics of tax system in Mexico:
- The estimated amount of tax is required every month. And in the tax declaration in the end of year, corporations pay the balance between the estimation and actual price.
- For the calculation of ISR, the influence of inflation should also be considered.
- For the calculation of PTU, it should be calculated after adjustment of ISR.
- For the calculation of ISR, it is a trend to calculate based on expenditure, profit, cash revenue and payment.
- The form is more important than substance for the tax system in Mexico. Therefore, the documents required by laws must be prepared.
- For the companies, which have some scale, the accountant can submit the tax report. And the tax audit is conducted by financial auditor.
Personal Income Tax
When judging the scope of taxable income, it is significant to decide if the person is resident in Mexico or not. Residents in Mexico should satisfy the following conditions.
- The person should live in Mexico.
- The stay in Mexico should more than 183 days within 12 months.
The tax period is from January to December according to Tax Act in Mexico.
Business Income Tax
The targets of business income taxpayers are divided into demotic corporations and foreign corporations. Demotic corporations are established by laws of Mexico. Foreign corporations are the corporations established and registered in foreign countries. For the demotic corporations the taxable incomes include both the income in Mexico and the income in other countries. However, the dual taxable income will be deductible in Mexico.
And for the foreign corporations, only the income in Mexico will be imposed a tax. However, the foreign corporations, which satisfy the following conditions, will be treated as demotic corporations.
- 50% of the sales are in Mexico.
- The main activities are conducted in Mexico.
To learn more about our incorporation assistance and a range of services of tax in Mexico, send us a message or call us at +81-3-5369-2930.