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Tax and Accounting Issues

15. What is the estimated cost/burden of an employee in Mexico?

Answer: The cost of an employee is aproximately 30% above the employee gross salary. To determine this percentage, the amount of the salary and the company location have to be taken in consideration, due to the fact that the Mexican minimum wage is classified in three zones and the state tax is also different in some states.

16. What are the current tax rates in Mexico?

Answer: The Corporate tax rates are:

  1. Income Tax (ISR) 30%
  2. Flat Tax (IETU) 17.5%
  3. VAT (IVA) 16% (General) and 11% (in the border region)

17. How does the VAT tax affect my exportations to Mexico?

Answer: If your company is exporting to Mexico, your invoice does not includes VAT. However, at the moment of importation, the Mexican company/importer has to pay the 16% VAT to Mexican customs (Hacienda, the Mexican IRS),along any applicable importation duties. When the imported products are sold in Mexico, the import VAT paid at Mexican customs will be credited against the VAT received from the sale.

18. When does the VAT tax affect my payments for services in Mexico?

Answer: When a Mexican company provides professional services to a foreign company (exportation of services), the VAT tax rate is 0% since services exported are considered exempt from VAT.

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