Tax in Mexico

Who is the tax authority in Mexico?

The Servicio de Administración Tributaria (SAT) is the federal tax authority of Mexico, established under the Ley del Servicio de Administración Tributaria of 1995 and operating as a desconcentrated agency of the Secretaría de Hacienda y Crédito Público (SHCP). SAT administers the Impuesto sobre la Renta (ISR — income tax for individuals and companies), the Impuesto al Valor Agregado (IVA), the Impuesto Especial sobre Producción y Servicios (IEPS — excise on specific products), federal social-security coordination via the IMSS information-sharing arrangement, and customs administration [SC1][SC2]. State-level tax administration handles the Impuesto sobre Nóminas (state payroll tax) and a number of state-specific levies. Tax disputes proceed through the Tribunal Federal de Justicia Administrativa for administrative review and the federal courts (including the Suprema Corte de Justicia de la Nación) for judicial review. Contadores Públicos Certificados regulated under the Ley para la Transparencia y Ordenamiento de los Servicios Financieros and the Reglas Generales del Instituto Mexicano de Contadores Públicos (IMCP) are the principal credentialed tax-and-accounting profession.

What is the Mexican tax year and the filing deadline?

The Mexican tax year for individuals is the calendar year. The Declaración Anual de Personas Físicas is due by 30 April of the year following the tax year [SC3]. Most filers file electronically through the SAT portal using the pre-populated Declaración Anual tool, which aggregates third-party reporting (CFDI invoices, withholding statements, financial-institution interest reporting) into a draft return. Tax owed at year-end can be paid in up to six monthly instalments under specific conditions; balancing payments are due upon filing. Self-employed and business filers make monthly Pagos Provisionales of ISR throughout the year. 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.

How is Mexican tax residency determined?

Under Article 9 of the Código Fiscal de la Federación, an individual is a Mexican tax resident if they have established a casa habitación (home) in Mexico, or — where the individual has a casa habitación in another country — if the centre of their vital interests is in Mexico [SC8]. The centre-of-vital-interests test is met if more than 50 percent of the individual's total income for the year is sourced in Mexico, or if the individual's principal centre of professional activities is in Mexico. Mexican-public-officials residency presumptions apply to certain government-employed individuals abroad. Treaty residency tie-breakers under Mexico's bilateral DTCs apply where two jurisdictions both treat a person as resident.

Residents are taxed on worldwide income; non-residents on Mexican-source income only. Mexico operates the Régimen Simplificado de Confianza (RESICO) for personal-tax filers with annual revenue under MXN 3.5 million — a flat-rate progressive schedule of 1 percent to 2.5 percent on gross revenue, materially simpler than the standard ISR regime, available by election. The Régimen de Incorporación Fiscal (RIF) was phased out in 2022 with transition rules. Departure from Mexico does not trigger comprehensive exit tax for individuals, but specific anti-abuse provisions apply on transfers of substantial holdings to related parties prior to emigration.

How does Mexican personal income tax work?

Mexican personal income tax — Impuesto sobre la Renta (ISR) — operates on an 11-band progressive bracket structure for 2025. Rates are 1.92 percent up to MXN 8,952.49 of monthly taxable income, 6.4 percent up to MXN 75,984.55, 10.88 percent up to MXN 133,536.07, 16 percent up to MXN 155,229.80, 17.92 percent up to MXN 185,852.57, 21.36 percent up to MXN 374,837.88, 23.52 percent up to MXN 590,795.99, 30 percent up to MXN 1,127,926.84, 32 percent up to MXN 1,503,902.46, 34 percent up to MXN 4,511,707.37, and 35 percent above [SC4]. Annualised brackets aggregate the monthly schedule. The Subsidio para el Empleo (a refundable wage credit) reduces effective tax for low-income wage earners. Specific deductions and credits include personal medical and education expenses (with a cap based on UMA — Unidad de Medida y Actualización), retirement-fund contributions to AFORE, and mortgage interest on principal residence.

Investment income for individuals is generally subject to withholding at source — interest from bank deposits at the marginal rate based on a deemed-yield notional return, dividends at 10 percent additional withholding (on top of the corporate-level ISR already paid), and capital gains on listed securities at 10 percent under the separate-taxation framework introduced in the 2014 reform [SC5].

How does Mexican corporate tax work?

The corporate income tax — Impuesto sobre la Renta de Personas Morales — is a flat 30 percent on taxable profits, in force since 2010 and unchanged in subsequent legislation [SC4]. There is no reduced rate for small or medium-sized corporations under the standard ISR regime, although the Régimen Simplificado de Confianza for legal persons (RESICO-PM) provides a simplified flat-rate alternative for qualifying small companies up to MXN 35 million annual revenue. Branches of foreign companies are taxed at 30 percent on Mexican-source income with an additional 10 percent dividend withholding tax on after-tax remittances, for a combined effective branch rate of approximately 37 percent. Mexico has signed but not yet implemented the OECD Pillar Two Global Anti-Base Erosion (GloBE) framework into domestic law as of the most recent legislative cycle; practitioners should check the most recent Miscellaneous Tax Resolution for the current state of play [SC5]. The Mexican CFC regime (REFIPRES — Régimen Fiscal Preferente) catches Mexican-resident investments in low-tax jurisdictions and the participation-exemption regime under Article 11 of the ISR Law operates alongside.

How does indirect tax work in Mexico?

Value Added Tax — Impuesto al Valor Agregado (IVA) — is the principal indirect tax. The standard rate is 16 percent. The 0 percent rate applies to most basic foodstuffs (with specific food categories excluded from the 0 percent rate and subject to 16 percent under detailed schedules), exports of goods and services consumed outside Mexico, gold and silver ingots above 99 percent purity, and a number of specific supplies [SC4]. Border-zone reduced rates of 8 percent apply to qualifying activities in defined geographic areas along the northern and southern borders under the Decreto de Estímulos Fiscales Región Fronteriza Norte and the Decreto Región Fronteriza Sur. The mandatory IVA registration threshold is MXN 0 — registration is generally required from the start of taxable activity through the RFC (Registro Federal de Contribuyentes). Cross-border digital services to Mexican consumers by non-resident vendors are subject to IVA under the Plataformas Digitales regime in force since 1 June 2020. Excise duties (IEPS) apply on tobacco, alcoholic beverages, gasoline, sugary drinks, junk food, and a number of other categories.

How is crypto taxed in Mexico?

The SAT has not issued comprehensive cryptoasset-specific tax guidance in the way that some jurisdictions have. The general position taken by SAT and reflected in published Q&A and individual rulings is that cryptoassets are treated as virtual assets generating ordinary or capital income depending on the activity carried on by the filer [SC5]. For individual filers, gains on the disposal of cryptoassets are typically reported under the income from transfer of property (enajenación de bienes) 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 under the broad income definition. Receipt of crypto as compensation is taxable as employment income at fair market value on receipt. The Fintech Law (Ley para Regular las Instituciones de Tecnología Financiera, 2018) regulates the operation of crypto exchanges and other Instituciones de Tecnología Financiera; the regulatory and tax frameworks operate in parallel.

How does Mexico handle tax treaties?

Mexico maintains a network of approximately 60 comprehensive Double Taxation Conventions in force, covering Mexico's principal trading partners [SC5]. Most Mexican treaties follow the OECD Model with Mexico-specific reservations on the credit-versus-exemption method (Mexico generally applies the credit method) and on technical-services source taxation. Mexico signed the OECD Multilateral Instrument and the MLI's modifications, including the Principal Purpose Test, apply to many of Mexico's covered DTCs for periods from 2024 onward (Mexico's MLI ratification was on a slower timeline than most OECD peers). The CFC regime (REFIPRES) under Articles 176–178 ISR Law operates as an anti-deferral mechanism alongside the treaty network. Foreign tax-credit relief is generally claimed under Article 5 ISR Law for both individuals and corporations.

What are the common penalties and pitfalls for foreigners?

Late filing of an annual return triggers a fine under the Código Fiscal de la Federación (CFF), with the amount determined by the type of obligation and number of repetitions [SC1]. Late payment of tax triggers Recargos (surcharges) at the published monthly rate plus interest on unpaid amounts. Penalties for tax-fraud offences under Article 108 CFF range from monetary fines to imprisonment for up to nine years for serious cases, with reductions for cooperative-disclosure procedures.

Common pitfalls for arrivals to Mexico include: assuming the centre-of-vital-interests test alone determines residency when the casa habitación trigger applies first; missing the RFC registration obligation soon after activity begins; underestimating the breadth of the Plataformas Digitales regime for digital services; and missing the cross-border worker withholding and IMSS social-security obligations. For complex residency, regime-elective, or cross-border scenarios, common approaches discussed by practitioners include consulting a credentialed Contador Público Certificado before relying on a single-test conclusion.