Accounting and tax

tax planning in Mexico

Corporate income tax considerations

  1. The corporate income tax in Mexico is levied at a standard rate of 30%;
  2. Mexican entities are not subject to special tax treatment on capital gains, and the use of capital losses is restricted in some cases;
  3. Value Added Tax is imposed at a standard rate of 16% and a 0% rate applies to food, medicine and certain other items with some exceptions;
  4. Dividends paid to resident and non-residents are subject to a withholding tax of 10%;
  5. Royalties paid to a non-resident entity are subject to a withholding tax rate of 35% in case of patents and trademarks or 25% in case of other kinds of royalties unless reduced under a tax treaty. A 40% rate applies where royalties are paid to a related party located in a tax haven;
  6. Interests paid to a non-resident are subject to a withholding tax varying between 4.9% (interest paid to a bank) to 35%. A 40% rate applies where interest payments are made to a related party located in a tax haven. The rate may be reduced under a tax treaty.

Tax incentives

  1. Companies registered in the Export Processing Zones are exempt from corporate income tax;
  2. Business losses can be carried forward for up to 10 years, a carryback thereafter is however not permitted;
  3. Dividends received from a resident company are exempt from withholding tax;
  4. Mexico does not impose any exchange controls, and businesses can freely repatriate their funds.

Tax administration

  1. All companies must file annual tax returns with the Tax Administration within the first 3 months of the following the end of the fiscal year;
  2. VAT filings must be made monthly, before the 17th of each month;
  3. Statutory audit is required if i) the company’s annual revenue exceeds US$2.6 million or ii) the assets amount to US$5.2 million or iii) the company has more than 300 employees;
  4. All trading companies in all Mexico provinces are required to issue digital invoices for every actual transaction.

Other considerations

  1. Employers must contribute for social security to Mexican Social Security Institute (IMSS) at a varying rate of 15% to 25% of an employee’s monthly remuneration;
  2. Mexico has signed double tax treaties with 55 countries including Australia, Canada, China, UK and the United States;
  3. Mexico has also signed more than 20 multilateral and free trade agreements including North American Free Trade Agreement (NAFTA) and European Free Trade Association (EFTA) among others;
  4. Healy Consultants’ Mexico tax planning services are tailored to meet the precise needs of international entrepreneurs. Unlike many corporate services providers, we take a global approach to our tax planning services, thinking ‘outside the box’ to provide a creative solution which fits your needs;
  5. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Healy Consultants Compliance Department assists our Clients efficiently and completely discharge their Mexico legal and compliance obligations when establishing and doing business in Mexico.

Company compliance considerations

  1. Under the Mexican General Law of Corporations, all resident companies must maintain the following records:
    • Personal details of company’s shareholders;
    • Minutes of every shareholder meeting;
    • Changes in company’s share capital.
  2. It is mandatory for all Mexico resident companies to maintain a local registered address in the country;
  3. Resident companies must seek approval from the Mexican government on all M&A matters;
  4. All publicly listed companies must file financial reports with the Mexican Securities and national banking commission;
  5. Mexican companies must share up to 10% of their annual profits with their employees;
  6. The process to change a Mexican company’s by-laws and articles of association involves prior approval by a local notary public. Healy Consultants can assist our Clients to timely amend such documents in Mexico. This is notably required for the following changes of corporate structure: i) increase/decrease of paid up share capital ii) changes of ownership structure and iii) modifications to the powers given to the directors.

Employer and other considerations

  1. The maximum working week in Mexico is 48 hours for all employees and a maximum of 3 hours overtime a day;
  2. Mexico Federal Labour Law (FLL) allows workers the right to form and engage in union activity;
  3. Sale of property with value higher than US$1,650 requires the documents to be signed before a public notary;
  4. The current minimum wage in Mexico is US$4.5 per day;
  5. All employers must contribute 2% of their payroll towards their employees’ retirement fund and 5% towards their housing fund;
  6. When registering in Mexico, a license is required for all business activities. Healy Consultants can assist our Client in determining what operating licenses are required for their company.

Contact us

For additional information on our accounting and legal services in Mexico, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi
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