General Taxes in Mexico

Information about federal, state and municipal taxes in Mexico: road tax, property taxes and consumption taxes...

The federal (national) tax system in Mexico is administered by the Servicio de Administración Tributaria (SAT), which is part of the Finance Ministry (Secretaría de Hacienda).

The Mexican tax year follows the calendar year, ending on 31 December.

There are a number of general taxes that must be paid by all residents of Mexico, and also by non-residents who receive an income in Mexico.

Some taxes are federal; others are local. Local taxes in Mexico City can be paid either at the central Mexico City Government Tesorería office, or at local kioscos around the city.

The main taxes in Mexico, other than income tax include:

  • VAT
  • Property taxes (local)
  • Vehicle taxes
  • Employee taxes (local)
  • Import duties

There are no capital transfer taxes, gift taxes or inheritance taxes in Mexico.

The process of filing tax returns is bureaucratic and complex. This, together with the need to keep up to date with constantly changing regulations makes using an accountant essential for businesses, and advisable in most cases for individuals.

Value Added Tax (VAT) – IVA

Value added tax (Impuesto al valor agregado) is paid at the time of purchase of a product or service. It is paid by everyone and there is no distinction between residents and non-residents. There are four different rates of VAT:

  • Exempt – for example, land and property purchase, books, newspapers and magazines
  • Zero rate – for basic commodities (for example, bread, milk, flour, water) and medicines
  • Normal rate (16 percent) – for everything else
  • Special rate – for cities near to the border with the US (this rate is currently lower than the normal rate)

The list of zero-rated items and the VAT rates currently in effect are published in the VAT law, which is reviewed annually by the Government as part of the annual national budgeting process.

Article 5 (Articulo 5) sets out the VAT rates applicable and provides an explanation of which goods are zero-rated.  Article 9 (Artículo 9) lists items exempt from VAT.

Businesses charging VAT must provide a VAT return to the Mexican Tax Office (Servicio de Administración Tributaria - SAT) each month. VAT returns must be presented monthly, by the 17th of the following month for which the return is being submitted.

VAT returns are submitted via the SAT website. In order to make VAT declarations it is necessary to use the tax number (RFC) and password provided when the business was originally registered with SAT. Online help is available (in Spanish).

VAT payable is calculated as follows:

  • Deduct the total of VAT paid on purchases for the month from the total of VAT charged to customers for the month
  • If more VAT was charged than paid, the difference must be paid
  • If more VAT was paid than charged, the resulting amount may be carried forward or claimed back

VAT payments are made into the SAT account either by bank deposit or bank transfer.

Import Duties in Mexico

The Impuesto General de Importación is an indirect tax paid on all new goods imported into Mexico.

Although the main implication of this tax is for businesses importing goods for sale or use as raw materials, it is important to be aware that it also applies to individuals importing new goods to a value of more than US$ 1,000 per shipment.

The rate payable depends on the type of goods being imported. Details of the Impuesto General de Importación – how it is calculated, and how it can be paid can be found on the Servicio de Administración Tributaria (SAT) website.

Note: this process will normally be handled by the freight forwarder or removal company dealing with the importation of the goods.

Information provided by Cesar Reyes, Contador Público 
Email / Tel: +52 55 7787 7760