Tax in Mexico

Who is the tax authority?

The Servicio de Administración Tributaria (SAT) is Mexico's federal tax agency. It operates as a desconcentrado body under the Secretaría de Hacienda y Crédito Público (SHCP). SAT administers Impuesto sobre la Renta (ISR — income tax), Impuesto al Valor Agregado (IVA — VAT), excise duties, and customs.

State-level authorities administer the Impuesto sobre Nóminas (state payroll tax) separately from SAT. Tax disputes go first to the Tribunal Federal de Justicia Administrativa, then to the federal courts, and ultimately to the Suprema Corte de Justicia de la Nación.

Contadores Públicos Certificados (CPCs) — certified public accountants regulated by the Instituto Mexicano de Contadores Públicos (IMCP) — are the principal credentialed tax and accounting profession in Mexico.

What is the tax year and when are returns due?

Mexico's tax year for individuals is the calendar year (1 January to 31 December). The Declaración Anual de Personas Físicas — individual annual return — is due by 30 April of the following year. Self-employed filers make monthly Pagos Provisionales (provisional payments) throughout the year to pre-pay ISR.

Companies file the Declaración Anual de Personas Morales by 31 March of the following year. IVA returns are filed monthly, with payment due by the 17th of the following month. The monthly DIOT (Declaración Informativa de Operaciones con Terceros) — a VAT information return — accompanies IVA filings for most businesses.

Who counts as a Mexican tax resident?

Under Article 9 of the Código Fiscal de la Federación (CFF), an individual is a Mexican tax resident if they have established a casa habitación — a permanent home — in Mexico. Where the person also has a home in another country, Mexico uses the centro de intereses vitales (centre of vital interests) test.

The centre-of-vital-interests test is met when more than 50% of total annual income is Mexican-sourced, or when the principal centre of professional activities is in Mexico. Residents pay tax on worldwide income; non-residents pay tax only on Mexican-source income. Treaty tie-breaker rules in Mexico's bilateral agreements override domestic tests for dual-resident cases.

Mexico does not impose a comprehensive departure exit-tax on individuals, but specific anti-abuse rules in the ISR Law apply to transfers of substantial holdings to related parties before emigration. Deep-dive: see expat and cross-border tax in Mexico.

What are the personal income tax rates?

Mexican personal income tax — Impuesto sobre la Renta (ISR) — uses 11 progressive brackets for 2024. Brackets are set in monthly amounts; the annual return aggregates monthly figures. The top rate of 35% applies to income above approximately MXN 4,511,708 annually.

The Subsidio para el Empleo — a refundable wage credit — reduces effective tax for low-income wage earners. Permitted deductions include personal medical expenses, education costs (both capped to UMA-indexed limits), AFORE retirement contributions, and mortgage interest on a principal residence.

Investment income faces separate treatment. Interest from bank deposits is withheld at a notional rate. Dividends face an additional 10% withholding on top of the corporate-level ISR already paid. Listed-securities capital gains are taxed at a flat 10% under the separate-taxation framework introduced in the 2014 reform.

How does corporate tax work?

Mexico's corporate income tax — Impuesto sobre la Renta de Personas Morales — has been a flat 30% since 2010. There is no surtax and no reduced rate for standard corporations under the main ISR regime.

The Régimen Simplificado de Confianza (RESICO) also covers individuals with annual revenue under MXN 3.5 million at rates of 1–2.5% on gross revenue — substantially simpler than the standard 11-bracket ISR. The earlier Régimen de Incorporación Fiscal (RIF) was phased out in 2022 with transition rules.

Branches of foreign companies pay 30% on Mexican-source income plus an additional 10% withholding on after-tax remittances, giving a combined effective rate of approximately 37%. Mexico's REFIPRES — Régimen Fiscal Preferente — CFC regime under Articles 176–178 of the ISR Law catches investments in low-tax jurisdictions.

Mexico signed the OECD Pillar Two Global Anti-Base Erosion framework but has not yet transposed GloBE rules into domestic law. Practitioners should check the most recent Miscelánea Fiscal for the current state of play. Deep-dive: see small business tax in Mexico.

What about IVA and other indirect taxes?

Impuesto al Valor Agregado (IVA) is Mexico's VAT equivalent. The standard rate is 16%. A reduced rate of 8% applies to qualifying activities in defined border zones under the Decreto de Estímulos Fiscales Región Fronteriza Norte and Decreto Región Fronteriza Sur.

IVA registration is mandatory from the start of taxable activity — there is no registration threshold. All businesses register through the RFC (Registro Federal de Contribuyentes), Mexico's universal taxpayer ID. Non-resident digital-services vendors must register for IVA under the Plataformas Digitales regime in force since 1 June 2020.

The Impuesto Especial sobre Producción y Servicios (IEPS) — Mexico's excise duty — applies to tobacco, alcoholic beverages, gasoline, sugary drinks, junk food, and other specific categories. The Impuesto sobre Nóminas (ISN) — a state payroll tax — varies by state, typically 2–3% on gross payroll, and is collected by state authorities, not SAT.

Deep-dive: see VAT and indirect tax in Mexico.

How are cryptoassets taxed?

SAT has not issued comprehensive crypto-specific tax guidance. The general SAT position — reflected in published Q&A and individual rulings — is that cryptoassets generate either ordinary income or capital income depending on the activity.

Individual disposals are reported under the enajenación de bienes (transfer of property) chapter of the ISR Law and taxed at the progressive personal rates, with available deductions and inflation-adjustment mechanisms. Mining and staking rewards are taxable as ordinary income at fair market value on receipt. Crypto received as employment compensation is taxable as employment income at fair market value on receipt.

Deep-dive: see crypto taxation in Mexico.

What is Mexico's treaty network?

Mexico maintains approximately 60 active comprehensive Double Taxation Conventions (DTCs). Most treaties follow the OECD Model. Mexico generally applies the credit method rather than the exemption method, and reserves technical-services source taxation in many agreements.

Mexico ratified the OECD Multilateral Instrument (MLI). MLI modifications — including the Principal Purpose Test — apply to many of Mexico's covered DTCs for periods from 2024 onward. Mexico's MLI implementation timeline was slower than most OECD peers; check individual treaty notification status for each specific agreement.

The foreign tax-credit mechanism under Article 5 of the ISR Law applies for both individual and corporate filers. The REFIPRES CFC regime under Articles 176–178 of the ISR Law operates alongside the treaty network as an anti-deferral mechanism. Deep-dive: see tax treaty relief in Mexico.

Where does Mexico sit in the regional cohort?

Mexico anchors the LatAm major tax archetype alongside Brazil and Argentina. The Americas splits into 5 distinct tax profiles across the hemisphere:

Common pitfalls and penalties

Foreign companies and individuals often trip on these recurring traps when operating in Mexico:

When should you talk to a Mexican tax pro?

Some filings are manageable through the SAT self-service portal with the pre-populated Declaración Anual. Others get complicated quickly:

• Your income reaches the 34–35% top ISR brackets (monthly taxable income above MXN 1.5M)
• You are considering RESICO election or checking whether you still qualify
• You have cross-border income from a USMCA partner or DTA country
• Your company operates as a Maquiladora under the IMMEX regime
• You receive dividends, capital gains on listed securities, or crypto proceeds
• You are setting up a Mexican entity as a branch of a foreign company
• You received a SAT audit notice, corrective return request, or REFIPRES query
• You operate across multiple Mexican states and face multiple ISN registrations

You can find vetted Mexican contadores públicos through the directory below.

This page is general information. It is not personal guidance for your specific situation. Tax rules change. Always check current figures on the SAT website (sat.gob.mx) or with a licensed Mexican contador público before filing.