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If you want to do business in Mexico, you have to know about taxation for a LLC, which is the most common legal entity in Mexico.

Mexican resident companies are liable to tax on their worldwide income. The predominant tax rate for offshore income, from our research, and this is not personal tax advice, is 30%. However, undistributed profits of a foreign subsidiary are not usually subject to Mexican tax until dividends are paid. A LLC in Mexico will pay CIT at 30% rate. This ranks Mexico as 136th when compared to corporate tax rate worldwide.

The VAT rate in Mexico is 16.00%, that ranks the country as 134th overall in terms of VAT taxation rate internationally. In terms of other taxation, an employer will contribute 7.58% to the equivalent of a social security fund and an employee will contribute 1.65%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 64hours. Contributing to this is the number of yearly labor tax payments, which is 2 in MX.

Thin capitalisation mandates are officially enacted. Thin capitalisation refers to any type of laws on given company with respect todebt-to-asset ratios.
Dividends received by a Mexico resident entity from another resident entity are exempt from corporate income tax. Dividends received from a foreign company are taxable, but a tax credit may be available for foreign tax paid. Dividends are payments of an earnings of the legal entity, passed by by the board, to shareholders. Dividends can be either stock, cash, or property.
Capital Gains are generally subject to corporate income tax at the standard rate. Capital Gains from the sales through the Mexican Stock Market may be taxed at a reduced rate of 10%. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.

The dividends withholding tax rate is 10%. This means that the tax authorities expects companies to automatically withhold 10% of dividends remitted abroad. The interest withholding tax rate ranges from 4.9% to 35%. This means that the taxman expects legal entities to automatically withhold from 4.9% to 35% of payments abroad on interest payments. The royalties withholding tax rate may be 25% or 35% (patents and trademarks). This means that the tax authorities expects legal entities to withhold 25% or 35% of royalty payments offshore. Payments on royalties and interests to residents of jurisdictions considered tax havens are subject to a withholding tax of 40%.Withholding taxes may be reduced or eliminated under a tax treaty.
There is no known tax on wealth in Mexico. There are no known inheritance taxes. There are property and transfer taxes in Mexico. There are widely used research and development tax incentives in Mexico.

The above is not tax or legal advice for your particular situation. We can help you find to an expert in Mexico who will advise you. Want to work together? Click the free consultation button above or press incorporate now if you are in a hurry.

Country details

Mexico City
North America
Spanish (Mexico)

Tax treaties

Country Type Date Signed
Finland DTC  1997-02-12
United States DTC  1992-09-18
Bahrain DTC  2010-10-10
Ukraine DTC  2012-01-23
Turkey DTC  2013-12-13
Isle of Man TIEA 2011-04-11
Lithuania DTC  2012-02-23
Venezuela DTC  1997-02-06
Curaçao TIEA 2009-09-01
Guernsey TIEA 2011-06-27
Estonia DTC  2012-10-19
Qatar DTC  2012-05-14
Kuwait DTC  2009-10-27
Guatemala DTC  2015-03-13
Iceland DTC  2008-03-11
Sint Maarten TIEA 2009-09-01
Sweden DTC  1992-09-21
Saint Lucia TIEA 2013-07-09
Costa Rica DTC  2014-04-12
Gibraltar TIEA 2012-11-29
Ireland DTC  1998-10-22
Samoa TIEA 2011-11-30
Australia DTC  2002-09-09
Belize TIEA 2011-11-17
Belgium DTC  1992-11-24
Ecuador DTC  1992-07-30
Colombia DTC  2009-08-13
Norway DTC  1995-03-23
United Arab Emirates DTC  2012-11-20
Hungary DTC  2011-07-24
Indonesia DTC  2002-09-06
Aruba TIEA 2013-07-18
Canada DTC  2006-09-12
Hong Kong, China DTC  2012-06-18
Cook Islands TIEA 2010-11-22
Chile DTC  1998-04-17
Malta DTC  2012-12-17
Cayman Islands TIEA 2010-08-28
Denmark DTC  1997-06-11
Liechtenstein TIEA 2013-04-08
Peru DTC  2011-04-27
South Africa DTC  2009-02-19
Brazil DTC  2003-09-25
Latvia DTC  2012-04-20
Jersey TIEA 2010-11-08
Greece DTC  2004-04-13
United Kingdom DTC  1994-06-02
France DTC  1991-11-07
Israel DTC  1999-07-19
Uruguay DTC  2009-08-14
Slovakia DTC  2006-05-13
Romania DTC  2000-07-20
Poland DTC  1998-11-30
Barbados DTC  2008-04-07
New Zealand DTC  2006-11-16
Japan DTC  1996-04-09
Spain DTC  1992-07-24
Korea, Republic of DTC  1994-10-06
Luxembourg DTC  2001-02-07
Russian Federation DTC  2004-06-07
Netherlands DTC  1993-09-27
Portugal DTC  1999-11-11
Austria DTC  2004-04-13
Bermuda TIEA 2009-09-15
China DTC  2005-09-12
Switzerland DTC  1993-08-03
Bahamas, The TIEA 2010-02-23
Czech Republic DTC  2002-04-04
Panama DTC  2010-03-24
India DTC  2007-09-10
Singapore DTC  1994-11-09
Germany DTC  2008-07-09
Italy DTC  1991-07-08

Tax treaties Map



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