Mexico

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

The rate of the Impuesto Sobre Renta de las Sociedades (IRS) has been reduced to 28% in 2007.
Moreover, companies set up in Mexico also have to pay under certain conditions a tax on net assets (TNA) of 1.8% on assets value (amount deductible from the corporate income tax).

   
Tax rate on long-term capital gains Capital gains are taxed in Mexico at the rate of 28%.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies The dividends shared by Mexican companies to non-residents are not subjected to any deduction at the source.
   
Tax rate on branches Branches of foreign companies have the same fiscal obligations as the Mexican companies. They are taxed at the rate of 28%.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate The progressive rate of the personal income tax varies from 3% to 30%, according to the monthly tax bracket:
from 0.01 to 439.19 MXN 3%
from 439.20 to 3,727.68 MXN 10%
from 3,727.69 to 6,551.06 MXN 17%
from 6,551.07 to 7,615.32 MXN 25%
beyond 7.615,33 MXN 30%
   
Tax deductions or other allowances There are several types of deductions attributed to taxpayers in Mexico. You can find out the nature of all the deductions by contacting the fiscal administration of each region.



VAT rates

Standard rates 15%
   
Reduced rates The reduced tax rate is 10% and applies to supplies by residents of a frontier zone.
Food, books and newspapers, fertilisers and medicines are exempted, such as construction of residential dwellings, certain financial and insurance services, teaching and medical services.



Other important taxes


Name of tax
Rate
Betterment contribution, business assets tax, import duties, payroll tax, municipal property tax, tax on motor vehicles  
 


 

Accounting

Introduction
The Mexican accounting model is modern and refers to international accounting rules.
All accounting procedures and recordings must be approved by a local body.


General accounting principles
BALANCE SHEET:
1) Assets
- Current assets
- Liquid assets
- Doubtful net provisions
- Employees
- Other
- Income taxes
- Inventories
- Total current assets
2) Equipment, machines: tangible assets
- Depreciations
3) Other assets
4) Total assets

PROFIT AND LOSS ACCOUNT:
1) Net sales
2) Gross profit
3) Selling and general expenses
4) Running income
5) Cost of global financing
- Interests
Fluctuations
6) Profits before income tax
- Income tax
7) Net profit.

Obligations and publications
The balance sheet, the profits and loss account and the balance are compulsory.

Certification and auditing
The accounting authorities are the audit department of the Ministry of Finance.

Professionals and representative organizations
The diploma of public accountant is necessary to profess in the country.



Useful links
the Tax Administration of Mexico (in Spanish)
- Invest in Mexico

Last modified in January 2007
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