Mexico: Other Taxes

Last Updated: 26 June 1996
TAX ON ASSETS

Strictly, the federal tax on assets (impuesto al activo) or net worth does not constitute the type of mini-mum income tax that exists in other countries, but its objectives are similar. Income tax may be credited against the tax on assets. Thus, if income tax due is equal to or greater than tax on assets, no additional tax is levied.

Those that must pay the tax include resident companies and individuals engaged in business activities and permanent establishments of nonresidents (on assets attributable to those establishments). Companies in the financial sector, most investment companies, and companies that are not subject to income tax are exempt, provided that they do not grant temporary use or enjoyment of their assets to persons obliged to pay the tax.

Tax on assets is charged at 1.8% on the average value of the taxpayer's assets over the year, generally determined as follows:

Sum of monthly    Average of       Average of    Average of    Value
averages of    +  investments  +   inventories - liabilities = of  financial         in land,                       after         assets
assets            other fixed                    specified
DIVIDED BY        assets,                        reductions
Number of months  and intangible
in period         assets

Rules are prescribed for determining these averages. Taxpayers may adopt an alternative procedure under which they pay tax for the current year that is equal to the tax adjusted for inflation that they would have paid in the fourth year following that for which tax is determined.

VALUE ADDED TAX

Value added tax (VAT) is levied on individuals and companies (including nonresidents with establishments in Mexico) that sell goods, provide services, grant temporary use or enjoyment of goods, or import goods and services. VAT is computed by crediting taxes paid on purchases against tax liabilities arising from sales. It is charged on the total selling price of the goods, rights, or services and on the value of imported goods or services. The total selling price includes additional charges for expenses. Taxes paid to acquire and use goods and services may not be credited when the related expenses are not deductible for income tax purposes, and if the expenses are only partially deductible, the tax may be credited only in the proportion in which the expenses are deductible.

The general VAT rate is 15%. The rate is 10% on most activities carried out by border residents. Some activities, such as the sale and import of foods and patent medicines, are zero rated. Exports are also zero rated. Exemptions include sales of land and construction used or to be used for residential purposes; books, newspapers, magazines, and copyrights; notes receivable and credit instruments (including shares); and prescribed educational services. Some imports are exempt, including returns of goods temporarily exported, goods in transit or subject to reshipment, and goods and services that would be exempt or subject to the zero rate if supplied within Mexico. When goods and services are exempt from VAT, the seller or supplier must not charge VAT and cannot recover any VAT incurred.

SPECIAL PRODUCTION AND SERVICES TAX

Special production and services tax is payable by companies and individuals that are engaged in the import or sale of beer and other alcoholic beverages, table wine, and cider; processed tobacco; or oil industry products. The provision of services by com-mission or mediation agencies and the provision of representation services arising from the sale of goods subject to the special production and services tax also give rise to liability.

Like VAT, this tax is paid by the consumer. It is charged in addition to VAT. Tax rates range from 0% on certain exports up to 85% on the sale of processed tobacco.

PAYROLL AND SOCIAL SECURITY CONTRIBUTIONS

Social security contributions are based on daily wages. The rate is 15.7% for employers and 5.25% for employees. The pay ceiling is twenty-five times the general minimum wage in the Federal District for sickness and maternity insurance and ten times this minimum wage for disability and old age pensions and obligatory retirement and death payments.

Employers must pay 2% of the integrated wage of each employee, up to a maximum of twenty-five times the general minimum wage in the Federal District, by means of a deposit at a domestic credit institution in an individual savings account for employee retirement. Employers must make National Housing Fund contributions of 5% of salaries, up to a maximum of ten times the general minimum wage in the Federal District, as a deposit for their employees to obtain financing for housing purchases, construction, and improvements. The Federal District and many states levy an additional payroll tax on employers domiciled in their jurisdictions. The rate is 2% in the Federal District.

A new social security system will come into effect on 1 January 1997. The preceding discussion is based on the existing system. All details of the new system are not yet known, but it is expected that companies that pay employees minimum-wage or near-minimum-wage amounts will have a higher cost, as will companies that report a large number of job-related accidents.

REAL ESTATE ACQUISITION TAX

Real estate acquisition tax is a state tax levied on individuals and companies that acquire real estate in Mexico. The rates are determined by each state. The tax base is the value of the real estate. This tax is also incurred on mergers and divisions, even though no sale of real estate takes place.

REAL ESTATE PROPERTY TAX

Real estate property tax is a state tax levied on owners of real estate. The tax base is the officially registered value of the property as determined by the taxpayer per appraisal value or by unit values of the property provided by local tax authorities. The rates are determined by each state; as a rule, the tax charged is not burdensome.

VEHICLE POSSESSION AND USE TAX

Vehicle possession and use tax is paid by owners of automobiles, buses, trucks, tractors not used for farming, airplanes, ships, sailboats, motorized water skis and surfboards, and motorcycles. Some exemptions exist. Rates are determined yearly and vary with make and model.

MISCELLANEOUS TAXES

New car tax is paid in addition to VAT on sales of new automobiles into Mexico. However, per recent changes, an exemption applies for 1996. The tax will be repealed in 1997, but it may still be imposed at the state level. Individuals and companies must pay fees assigned annually by Congress for a variety of public services provided by the government. Fees must also be paid for the use and enjoyment of government property and the exploitation of mineral and metal deposits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Deirdre Silberstein, Deloitte & Touche, Washington on +1 202 955 4000 or enter a text search 'Deloitte & Touche' and 'Business Monitor'.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions