The Tax Rates Imposed in Mexico 

The different type of taxes imposed by the government of Mexico is listed below: 

Tax Rates in Mexico

  • Consumption Taxes 
  • Nature of tax 

Value Added Tax is also known as Impuesto al Valor Agregado (in Mexico) or in short IVA. 

  • Tax rates

As per the Value Added Tax Laws, the rate is 16%

  • Reduced Tax Rate: 

The supply of services and goods, enjoyment or use of goods in establishments and locals located in the zone of cross-border, are imposed with 8% tax.

The zero per cent rate applies to a large number of transactions such as the sale of magazines and books, the exportation of services and some goods, newspapers printed by the taxpayer, the sale of some essential food items ( include milk, meat, corn and wheat etc.), agricultural services and goods, patented medicines etc. 

Other consumption taxes 

  • 1) Excise duties imposed on:
  • 2) Gasoline: Its tax rate per cent varies. 
  • 3) Bear: 26.5%
  • 4) Wine: 26.5% to 53%
  • 5) Spirits: 53%
  • 6) Cigarettes and some other tobacco items: 160% along with an additional quota
  • 7) Services for gambling and raffles: 30%
  • 8) Soft drinks (MXN per litre) and junk food: 8%
  • 9) Telecommunications services: 3% 

The excise duty on tobacco products and soft drinks varies according to the rate of inflation in Mexico. 

The purchase of new vehicles is directed to taxation, while the various states may direct a tax duty on the ownership of these vehicles. 

Corporate Taxes 

  • Company tax: 30% 
  • The tax rate for foreign firms 

Mexican taxpayers residing in the country are direct to corporate income tax from their global income sources; foreign residents are taxed on their income attached to their permanent Mexican establishments. 

Foreign firms located in Mexico are direct to the same tax structure as national firms, though they do not receive benefits from some specific exemptions. Although different states have begun to provide competing tax incentive to lure foreign investors, the significant part of taxes in Mexico are charged at the federal level. 

  • Taxation on capital gains 

These types of gains arise for selling the shares, fixed assets and real property. These are regarded as regular income and are direct to the standard corporate tax rate

Capital gains results from the selling of stocks issued by Mexican firms, assets singly representative of such stocks, stocks issued by firms in foreign listed on MSE (Mexican stock exchange) or financial derivative tools. 

Tax Credits and Main Allowable Deductions

Start-up investment incurred prior to the start of business may be amortised at an annual rate of about 10%, after implementing the adjustment factors. The reduction of charitable giving is confined to 7% of the payable income of the earlier year.

 R&D expenditure (including spending in R&D) gives rise to a tax credit of 30%. 

Aggregate operating losses can be carried up to ten years, direct to adjustments for inflation. The losses carryback is not permitted. 

Non-deductible things include unauthorised donations, penalties, goodwill, contingencies, exempt salaries, indemnities, etc.

Corporate Taxation comparison of different companies

Mexico US Caribbean and Latin America Germany
Per year number of taxes payment  6.0 10.6 28.9 9.0
The time required for the administrative formalities 240.5 175.0 342.6 218.0
The overall share of taxes in percentage  53.0 43.8 46.3 49.0

Source: https://www.nordeatrade.com/en/explore-new-market/mexico/taxes

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