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    Tax and Accounting Obligations in México

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    Tax and Accounting Obligations in México

    Uploaded by

    diegoe.cantu
    6 views10 pages

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    Tax and accounting obligations in México

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    Copyright:

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    6 views10 pages

    Tax and Accounting Obligations in México

    Uploaded by

    diegoe.cantu

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Doing Business in Mexico

    Doing Business in Mexico

    Tax System
    § Tax System: code based (as all the legal system in
    Mexico)
    § Evidence requirements are very high
    § Form over Function
    § Physical documentation is necessary (e-Invoice,
    Agreements, By-Laws, etc)

    § Federal Taxation: main taxes are as a federal level


    § (ISR) Impuesto sobre la Renta / Income Tax
    § (IVA) Impuesto al Valor Agregado / Value Added Tax
    Doing Business in Mexico Tax System

    § In Mexico legal entities and individuals with business activities are


    obligated to pay federal taxes:

    Tax Rate

    Income Tax (ISR) 30%

    Value Added Tax (IVA) 0%, 16% **


    Doing Business in Mexico Tax System

    § Income Tax (ISR)


    § Accrual basis
    § All kind of income at worldwide level
    § Monthly payments are due every 17th day of each month

    Example of income accrual: All invoiced sales are accrued to


    determine the basis for the income tax.

    § The Annual Tax Return must be submitted before March 30th


    § The obligation to determine and submit Income Tax monthly
    payments starts after the first Tax Return in which a Tax Profit
    Coefficient is determined.
    § To determine the monthly payments the accrual income is
    multiplied by the Tax Profit Coefficient, the result is the basis
    for the Income Tax Monhtly Payment.
    Example:
    Accrued Income 100,000
    Tax Profit Coefficient 0.3000
    Tax Basis 30,000
    Monthly Income Tax (30%) 9,000
    Doing Business in Mexico Tax System

    § Value Added Tax (IVA)


    § Based on cash flow
    § Indirect Tax
    § Applies for the following activities: Transfer of goods,
    Rendering of independent services, Grant of temporary use
    or advantage of assets and Import of goods and services.
    § 16% for domestic activities and 0% for exportations
    § VAT has to be determined for each month and the payment
    is definitive.
    § In order to determine the monthly payment of the VAT, you
    have to substract, from the VAT charged in your sales, the
    creditable VAT payed for every expense. The difference,
    when the VAT from the sales is higher, is the VAT payable
    for the month.
    Example:
    VAT charged in sales 50,000
    VAT payed in expenses 30,000
    VAT monthly payment 20,000
    Doing Business in Mexico Tax System

    Tax Reporting Schedule


    Return Date
    Monthly Income Tax

    Monthly Value Added Tax Before the 17th of the month next
    Monthly withholding Income Tax following that for which the payment
    Monthly withholding VAT is due.

    State Taxes
    Social Security Contributions
    Annual Income Tax Three months next following the end
    of the fiscal year.
    Doing Business in Mexico

    Accounting
    § In México the Generally Accepted Accounting
    Principles are know as Mexican Financial
    Reporting Standards “MFRS”. (NIF, by its
    acronym in Spanish).

    § International Financial Reporting Standards


    (IFRS), International Accounting Standards
    (IAS) are supplementary part of the MFRS
    when on its absence thereby is required.

    § In México the accounting is recorded in pesos.


    Doing Business in Mexico

    § Every month an accounting closure has to be made


    to determine the monthly financial results and issue
    the monthly financial statements.

    § There is also the obligation to submit to the Tax


    Authority, accounting information every month.
    Doing Business in Mexico

    E-Invoice
    § Mexico is a Global Leader in the use of digital invoice
    technologies.

    § Since 2010 all invoices issued by tax contributors are mandatory digital.

    § Tax contributors need to obtain a specific digital certificate (CSD) issued


    by the SAT (Tax Administration Service) to apply advanced signature to
    invoices..
    Doing Business in Mexico

    § Once generated, the digital invoice needs to be submited to a PAC


    (Authorized Certification Provider) who inserts an electronic stamp
    and then the document it’s ready to be forwarded to the client. This
    stamp is necesary to make the invoice valid for tax purposes.

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