Consumption/VAT/Sales Tax in Mexico
- Nature of the Tax
- VAT (Value Added Tax) called "Impuesto al Valor Agregado - IVA"
- Standard Rate
- 16% - Value Added Tax Laws
- Reduced Tax Rate
- 11% for the activities of enterprises located in a frontier zone. Exports are subject to a rate of 0%, as well as basic foodstuffs, agricultural services related to the production of them and medicines.
- Exclusion From Taxation
- Articles exempt from VAT are: food products of primary needs, medicines, agricultural products, exports, etc. Also, the construction of residential dwellings and certain financial and insurance services, as well as medical and education services.
- Method of Calculation, Declaration and Settlement
The calculation of the VAT you are accounted for can be figured out as follows: from the total amount you have charged your client, you can subtract the VAT amount transferred from your purveyors for your purchases and expenses and comply with these requirements:
- Expenses, purchases or investments can be deductible from income tax. If the expense or investment has a partial deduction, the VAT can only be reduced for the same proportion. - The VAT that has already been paid to the purveyors, for the same month on which the tax is being calculated and providing separate supporting documents.
A tax declaration must be done before the day 17 of the following month that corresponds to the payment's date. An additional annual declaration has to be done the year following the one on which the income was received. The legal entities with profit must present their declaration by Internet during the first three months of the following year.
- Other Consumption Taxes
- Special Production and Services Tax Law (applied to alcoholic beverages, elaborated tobacco, gasoline and diesel). Laws for New Automobiles.
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