Mexican Income Tax

Tax Residents in Mexico: are liable to pay Mexican tax on their worldwide income

Non tax residents and non-domiciled Mexico: are liable to pay income tax on Mexican-sourced income in Mexico.

Individuals will be regarded as tax residents, non-resident:

  • Tax resident, if individuals whose home is in Mexico are considered to be resident for tax purposes and liable for taxes on their worldwide income.
  • If the individual also has a home in another country, he will be considered tax resident in Mexico if the centre of vital interests is in Mexico. This is deemed to be the case if more than 50% of the total income in a calendar year is of Mexican source or if the centre of professional activity is located in Mexico.
  • Non-resident, if individuals fall outside of the above guidelines but will be liable for tax on their Mexican source income only

Mexican-sourced income is defined as income arising out of goods or assets located within Mexican territory or from activities performed in Mexican territory.

Employment income tax is deducted at source by the employer. If the employer is non-resident, he has to file a monthly estimated tax return

Taxable income includes:

  • Salaries / wages,
  •  directors’ fees,
  •  bonuses,
  •  gratuities,
  •  allowances,
  •  certain fringe benefits,
  •  benefits in kind and employee profit sharing distributions

According to Mexican income tax law certain items are exempt from taxable income, such as: indemnities for accidents and illnesses, reimbursement of medical, dental, hospital and funeral expenses, retirement benefits and pensions provided by public institutions (private retirement plans are partially exempt), social security benefits paid by public institutions, social welfare payments, savings funds and travel expenses.

Tax Rates:

 

Income (MXN)

Tax Rate %

1 - 5,953

1.92

5,954 - 50,525

6.4

50,526 - 88,793

10.88

88,794 - 103,218

16

103,219 - 123,580

17.92

123,581 - 249,243

21.36

249,244 - 342,842

23.52

342,843 and over

30

Benefits and allowances in kind are fully taxable and valued at their cost to the employer or at market value, however items such as reimbursement of travel expenses, housing provided for the sole interest of the employer and moving expenses are considered non taxable income and are excluded from the tax calculation.

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