Mexico - Tax Guide for Freelance Contractors
Welcome to our guide to Mexican Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, Mexico.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in Mexico. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in Mexico.
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Tax Residents in Mexico: are liable to pay tax on their worldwide income,
Non tax residents in Mexico: are liable to pay tax on their Mexican-source income only.
Individuals will be regarded as tax residents:
- if they have a domicile in the country
- if their permenant home is in another country, but they have their “centre of vital interests” located in Mexico. For taxation purposes, centre of vital interest is considered in Mexico if more than 50% of the income earned in a calendar year comes from a Mexican-source or if the main centre of business activities is in Mexico.
In case of foreign residents working in Mexico, there is an exemption period of 183 consecutive or non consecutive days within a twelve month period, before becoming subject to local income tax. For Mexican residents, there is no exemption period.
Losing tax residence:
- All Mexican nationals that change their residency to another jurisdiction must file a notice of expatriation; otherwise they will keep the Mexican tax residency.
Only married persons under the joint asset ownership regime may apply for the joint tax return. In this case, the individual with the higher income should file the income and include all revenues and related deductions. Partnerships are also treated as separate taxable persons from their members.
Taxable income:
There are specific rules for each type of personal income such as: employment income, capital gains, fees, interest, dividends and profit distributions, etc. In case of wages, the taxes are withheld by the employer.
Benefits in kind are fully taxable and valued at the market value or at their cost for the employer.
Income tax rates for 2011:
Mexico operates on a monthly progressive personal income tax structure that ranges from 1.92% up to 30% (income above MXN 32,736.84). From 2010 to 2012 the personal tax rate (Impuesto Sobre la Renta - ISR) maximum rate will be 30%, 2013 rate will decrease to 29% and from 2014 onwards, personal income tax rate will be reduced to 28%. Current tax rates are as follows:
| Taxable income (MXN) | Tax due on lower limit (MXN) | Marginal rate on the excess (%) | |
| up to | 496.07 | 0 | 1.92 |
| from 496.08 up to | 4210.41 | 9.52 | 6.40 |
| from 4,210.42 up to | 7399.42 | 247.23 | 10.88 |
| from 7,399.43 up to | 8601.50 | 594.24 | 16 |
| from 8,601.51 up to | 10298.35 | 786.55 | 17.92 |
| from 10,298.36 up to | 20770.29 | 1090.62 | 21.36 |
| from 20,770.30 up to | 32736.83 | 3327.42 | 23.52 |
| over | 32736.84 | 6141.95 | 30 |
- Dependents school transportation in zones where transportation is compulsory;
- Medical, dental and hospital expenses of the taxpayer and his dependents;
- Funeral expenses for dependents up to the annual minimum wage;
- Charitable donations to authorized entities;
- Real interest paid with respect to mortgage loans with entities of the financial system.
| Taxable Income (MXN) | Tax Due on Lower Limit (MXN) | Marginal Rate on the Excess (%) | |
| up to | 125900 | 0 | 0 |
| from 125901 up to | 1000000 | 0 | 15 |
| over | 1000000 | 131115 | 30 |