The Mexico corporate tax rate is 30%, however, from 1981 to 2017, it averaged 34.31%, with a maximum of 42% in 1982 and a minimum of 28% in 2007. In this article, our Mexico company formation consultants explain a few key points related to the local corporate tax.
The federal corporate income tax in Mexico
The federal corporate income tax (CIT) in Mexico is applied to the income of resident taxpayers which derive from international sources and foreign residents on income derived from their private equity (PE) located in the country.
The federal corporate income tax in Mexico is 30%.
All businesses, including associations with a civil nature, branches and so on, must acquit this tax, unless specifically exempt, like for non-profit organizations. Our company formation advisors in Mexico can offer all the necessary details on what these exceptions consist of.
Taxpayers who act only in agriculture, livestock, forestry and fishing benefit from a reduction of 30% on their tax duties.
After a business has acquitted its federal corporate income tax in Mexico, after tax earnings (for example, income derived from the after tax earnings account) can be attributed to its shareholders without any tax charges at the corporate level.
A withholding tax on dividend payments to persons or foreign residents, like foreign corporations, is levied at a rate of 10%.
The withholding tax in Mexico is not applied to the distribution of profits which are taxed with a corporate taxation before 2014 in this country.
In Mexico, there are no state taxes on corporate net income.
Non-taxable corporate income in Mexico
There are a few exceptions in which the corporate income in Mexico is not due, such as:
• The dividend income from resident businesses in Mexico, as well as proceeds from stock redemptions connected with investments in shares in the country. The redeeming business, though, is taxed in some cases. Our Mexico company registration agents can provide more information on what these cases are, as well as assistance in setting up a company in Mexico;
• The income from certain types of investments effectuated by foreign-funded pension plans, when the funds are exempt from paying taxes in their countries of origin and they are registered;
• Capital contributions or repayment by shareholders of the losses incurred by a company;
• Other exceptions. We can provide more details on what these other exceptions consist of.
If you need to know more about the taxes on corporate income in Mexico, or for help to open a company in Mexico, please speak to our friendly staff.