Requirements You Must Know and Follow About Mexico Accounting Tax Compliance
Like all countries in North America, the United Mexican States, most popularly known as Mexico, also has a complex set of tax rules and payment policies to follow. Read below to know more about the requirements you should not miss when processing legal documents about Mexico Accounting Tax Compliance.
The taxes of Mexico cover many types of corporations and businesses, and these are widely different from the usual taxes for other individuals and entities. This article tells of the different corporate income taxes, together with the requirements.
Corporate Income Taxes in Mexico
The percentage for each are listed below:
- Corporate Income Tax is at 30%
- Capital gains that are considered to be corporate income are taxed at 30%
- Value Added Tax, more known as VAT, is at 16%
On Withholding Taxes
- Dividends paid to locals and non-locals or foreigners are at 10%
- Royalties paid to a foreigner or non-local body is at 35%
- Paid interests to foreign residents or non-locals is between 4.9% to 40%
What are the Incentives in Mexican Tax?
- One incentive in Mexican tax include the exemption of paying withholding taxes for dividends received from resident Mexican companies
- Businesses and corporations have the freedom to send backs to their home country as the country of Mexico do not have strict exchange controls
- Companies that are duly registered under or in Export Processing Zones are exempted from paying corporate income tax
For Mexico Accounting Tax Compliance: Tax Administration
Under Tax Administration, all trading companies have prerequisites to have digital invoices and provide them for every transaction. Mexico requires all companies to comply with the submission and filing of all annual tax returns within three months of the end of the arriving fiscal year. Value Added Tax (VAT), however, must be filed before the 17th of every month.
Aside from these, the following considerations must also be met:
- The employers must pay the Mexican Social Security Institute (IMSS) 15% to 25% of each employee’s salary monthly
Mexico is a registered member of NAFTA, or the North American Free Trade Agreement, and EFTA, or the European Free Trade Association.
- The country also has agreement regarding double tax treaties, which avoids the casting of double taxations. These treaties are in congruence with the following nations: the United States, Canada, and many other states in Europe.
The General Law of Corporations in Mexico
Important legalities outlined under the Mexican General Law of Corporations are considered essential to the Mexico Accounting Tax Compliance. Below are a few policies that must be taken note of:
- All Mexican resident firms must have duly registered addresses on local residences.
- Companies listed and registered publicly must submit and file its respective financial reports to the Mexican Securities and National Banking Commission.
- All companies with local residence must have proper safekeeping of company records, such as the contact information of all company shareholders, meeting minutes of each discussions, and the declarations of any changes in the capital of the business.
- 10% of the company’s annual income must be shared and given to the company’s employees.
Considerations by the Employer
All company owners and employers, for full Mexico Accounting Tax Compliance, must be made wary of the regulations they are required to comply regarding Mexican workers and their wages.
- A Mexican workweek consists of a maximum of 48 hours, excluding 3 hours overtime at most per day.
- The employees and the workers have the freedom to participate and join unions.
- The minimum salary of a Mexican worker is equivalent to USD$4.50 per day.
- 5% of a worker’s payroll must be allotted to his or her housing funds, whilst 2% must go to his or her retirement.
Knowing full well the proper processes and considerations when undergoing Mexico Accounting Tax Compliance enables one to navigate through it easily and without challenge. Taking these in mind while establishing the foundations of a corporation is significant and essential, no matter what industry the business may form in.