Accounting & Tax Compliance
The Mexican Tax and Public Credit Secretary (as it is known in Spanish, “Hacienda”) requires every corporation to file monthly tax reports. However, tax obligations are not paid until the end of the year. Monthly administration of companies can be expensive and customers should not be shocked at the high cost of running a business on a monthly basis when compared to other jurisdictions.
There are primarily three taxes all companies are required to pay: the Value Added Tax, Income Tax, and Corporate Flat Tax. A special products tax my require filing for producers of tobacco, alcohol and firearms related products. Failure to comply with these requirements can result in stiff penalties for your company. All of these filings must be made monthly even if your company has made no profits or otherwise been inactive during the past month. (This is why it is so important to properly dissolve your company when winding up business. See our section on dissolutions here)
MexicanIncorporation.com allows your company to remain in compliance fast and easily. Just scan and send your company’s financial documents to us and we handle the rest! We invite you to talk to our lawyers and accountants on staff.
Value Added Tax
Companies must submit monthly reports of their value added tax (sales tax) obligations. All sales of goods and services in Mexico are taxed at a rate of 16% unless an exception applies. In border areas, some transactions are taxed at 11% while food and medicines may receive different tax rates. The Mexican value added tax is federal and not administered by the individual Mexican states.
Companies must submit monthly reports of their corporation tax obligations. Corporations are taxed at the following rate: 30% from 2010 to 2012, 29% in 2013 and 28% from 2014 on. The corporation tax is due by March 31st every year.
Corporate Flat Tax
Companies must submit monthly reports of their corporate flat tax obligations. Companies are subject to a corporate flat tax of 17.5% on the sale of goods, provision of services and income generated from renal property. However, this tax only applies to amounts exceeding the Company’s regular income tax liabilities. The flat tax must be filed and paid by March 31 every year.
Perhaps unusual among many countries, Hacienda requires companies to disclose details about their suppliers, customers, and value of transactions with each. For example, a company must record the names and additional information for each and every company it has sold products to or otherwise done business with. Informational returns must be filed by the February 15th of every year.
Annual Tax Returns
Both S.A. de C.V.s (Corporations) and S. de R.L.s (Limited Liability Companies) are taxed as Corporations. In other jurisdictions, such as the United States, Limited Liability Companies may be taxed as either partnerships or corporations. Companies are required to file tax returns with Hacienda by May 31st of every year and also pay any tax liabilities they owe at the same time. Mexico charges stiff penalties with interest on any back-taxes. Be aware that new companies must file by December 31st of the year in which they begin operations.