Tax Figures
Corporate Income Tax
The corporate tax rate is 30%.
Income Tax Rate
- $0 – $5,952.84 pesos: 1.92
- $5,952.85 – $50,524.92 pesos: 6.40
- $50,524.93 – $88,792.04 pesos: 10.88
- $88,793.05 – $103,218.00 pesos: 16.00
- $103,218.01 – $123,580.20pesos: 17.92
- $123,580.21 – $249,243.48 pesos: 21.36
- $249,243.49 – $392,841.96 pesos: 23.52
- $392,841.97 – $750,000.00 pesos: 30.00
- $750,000.01 – $1,000,000.00 pesos: 32.00
- $1,000,000.01 – $3,000,000.00 pesos: 34.00
- $3,000,000.01+ pesos: 35.00
The above tax rate is applicable to resident individuals, which is progressive up to 35%.
Nonresident employees on temporary assignments of less than 183 days hired by nonresident foreign firms are exempt from income taxes, while those who have worked for longer than a year are subject to the following tax:
- MXP 0 – 125,900: 0%
- MXP 125,901 – 1,000,000: 15%
- MXP 1,000,001+: 30%
Payroll Tax
There is payroll tax in Mexico which is levied at the state level. The rate ranges between 1% and 3% of salaries and is withheld by the employer.
Sales Tax
There is payroll tax in Mexico which is levied at the state level. The rate ranges between 1% and 3% of salaries and is withheld by the employer.
Withholding Tax
Mexico imposes withholding tax (WHT) on certain classes of income paid to non-residents:
- Dividends: 10%
- Interest: 4.9 – 40%
- Royalties: 5%/25%/35%
- Branch remittance tax: 10%
Mexico has entered into double tax treaties with many countries that may reduce the tax liability on foreign-source income generated by foreigners.
Other Tax
Tax on production and services: Manufacturers and wholesalers of certain goods are charged a tax on production and services, such as alcoholic beverages and tobacco. The rates vary by product.
Real property tax: Ownership of real property is taxed at the municipal level.
Time to prepare and Pay Taxes
286 hours
Employers Social Security and statutory contributions
The Social Security Rate levied on employers is 7.58%. This is composed of retirement pensions, healthy and maternity insurance, occupational risk, day-care, disability and life insurance, and unemployment and old age insurance.
Employees Social Security and statutory contributions
The Social Security Rate levied on employees is 1.65%. This comprises of contributions to disability and life insurance and contributions to unemployment and old age.
Payroll
Mexican legislation on taxes for foreign employees are not as stringent, although are typically higher given the high levels of social security in the Mexican tax system. Salary earned abroad is exempt from tax in Mexico if the Mexican resident works continuously abroad for at least six months, while non-resident employees are only subject to income taxes from Mexican sources. There are some notable consideration with Mexican tax laws that foreign employers must be aware of, such as the different social security contributions, the VAT and withholding tax.
Remote Payroll
A remote payroll in Mexico is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Mexico. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Mexico is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Mexico under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Mexico may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Mexican payroll and can fulfil all tax, withholding tax and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Mexican employment laws.
Currency
Mexican peso (MXN)
