MEXICO Law and Practice Contributed by: Melissa Franco and Mauricio Oropeza, Deloitte Impuestos y Servicios Legales, S.C.
km from the borders and 50 km from the coasts of Mexican territory.
• if the receiver is a corporation that is Mexican resi - dent, there is no withholding tax (WHT); • if the receiver of the profit is an individual residing for tax purposes in Mexico, 10% WHT must be applied; and • if the receiver is a foreign resident for tax purposes, 10% WHT must be applied or it must be deter - mined whether it is possible to claim the benefits of a Double Tax Treaty to avoid double taxation in order to decrease the WHT to 5% or whether the participation exemption regime applies. 9.3 Tax Mitigation Strategies The specific tax strategy will depend on the nation - ality of the parties involved, as well as the specific transaction. However, there are several governmental incentives that are used by investors to lower their tax burden. For example, in the case of maquiladoras and service exportation, there is a Manufacturing, Maquila and Export Services Industry Programme (IMMEX), which allows the business to carry out temporal imports of products with a productive process and/or services for the export of goods or export services, defer - ring the payment of the general import tax, the value added tax and, if applicable, compensatory fees for the goods that are necessary for such industrial pro - cess or a service process intended for the produc - tion, transformation or repair of goods of foreign origin temporarily imported for export or for the provision of export services. Another example of a tax incentive is the denominat - ed “Plan México”, which entered into force in Janu - ary 2025 and the taxpayer the option to make the immediate deduction of the investment in new fixed assets acquired between January 2025 and the end of September 2030, deducting in the fiscal year in which the investment is made the applicable amount that results from applying to the original amount the percentage that corresponds according to the specific category of fixed assets (eg, for property considered as archaeological monuments, a deduction of 72% for 2025 and 2026 will apply, and 67% for 2027 to 2030). This incentive also provides an additional deduction of 25% of the increase in the expense incurred for the
9. Tax 9.1 Taxation of Business Activities The main federal taxes in Mexico for taxpayers are as follows. • Income Tax ( Impuesto sobre la Renta ) – 30% of the tax profit in companies or entities. For individuals, the specific percentage to apply is linked to the income received. • Value Added Tax ( Impuesto al Valor Agregado ) – rates of 16% or 0%, as some activities are exempt from such tax. • Special Tax on Production and Services ( Impuesto Especial sobre Producción y Servicios ) – this applies to the manufacture and selling of gasoline, alcohol, beer and tobacco, among other specific products. The specific rate applicable to each product varies from 3% to 200%. • General Import Tax on Foreign Trade ( Impuesto General de Importación al Comercio Exterior ) – the rate is calculated based on the tariff fraction in which the imported merchandise is classified. There are some additional special taxes applicable to specific industries, such as hydrocarbon exploration and extraction or mining. 9.2 Withholding Taxes on Dividends, Interest, Etc When a business distributes profits, there are two options: • if the company has sufficient Cuenta de Utilidad Fiscal Neta (CUFIN – the Net Tax Profit Account) balance, there is no need to pay any additional tax; or • if the company does not have enough CUFIN bal - ance, 30% tax must be paid, applying a gross-up ratio of 1.4286 prior to the 30% tax. On the other hand, the receiver of the profits has the following scenarios:
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