Sistemas y Asesoría Manuel López Léautaud
Best Investment, Shares, Business, Receivables, References
¿Requieres Ayuda? Me complace ayudar a nuestros vecinos y hermanos y hermanas Hispano parlantes con cualquier asunto relacionado con GeoCities. Soy uno de los Guias de los servicios a la comunidad (CLs). Escribeme
Need Help? I am pleased to help my neighbors. I am one of the Guides to services of the community (CLs). E-mail me
TAX SYSTEM
I.- Corporate Tax
II.- Royalties and Interest Taxes
III.- Value Added Tax
The Mexican Government has enforced a very active policy on agreements to prevent double taxation.    Today, agreements of this nature are in effect with the United States, France, Sweden, Canada, Switzerland, Spain, Italy, Great Britain, Northern Ireland, The Netherlands, Singapore and South Korea. Other similar agreements with Germany, Belgium and Ecuador will become effective this year.  
These agreements essentially involve tax credits in those countries where foreign investment is originated for taxes paid in Mexico on salaries and service fees, profits, dividends, royalties, and interest paid on loans.
C A L L I N G   A L L   C A P I T A L I S T S
I.- Corporate Tax  [top]
Corporate tax is 34%. This is a favorable rate as it is lower than that in the United States, Canada, the United Kingdom, Germany and Japan, as well as those in some developing countries which have been quite successful in attracting foreign capital (Philippines and Indonesia)
Companies engaged in services for agriculture, stock breeding, forestry, and fishing are exempt of such taxes, provided their profits are reinvested. 
In Mexico, companies are subject to a 1.8% tax on the average yearly value of their fixed and financial assets (There is a tax deduction applicable to liabilities with Mexican based companies that do not qualify for the asset tax exemption). This tax is only applicable when the resulting amount exceeds the regular income tax due, in which case only the corresponding difference is paid. 
This tax is mandatory only after the third year of operations. Also, companies with losses in any given period mayreduce their asset tax considering any income taxes paid during the three previous years, or they may deduct it from the following year's income taxes.
CORPORATE INCOME TAX IN SELECTED COUNTRIES
COUNTRY 
 TAX RATE%
Mexico 34
United States  38.3 (a)
Canada 39 - 43.5 (b)
United Kingdom  35 (c)
Germany  36 - 50 (d)
Japan  28 - 37.5 (e)
Philippines  35
Indonesia 35
(a) Average rate of federal and provincial corporate taxes.
(b) The lowest rate is applied only to production earnings and Canadian processing.
(c) 25% is applied to companies with earnings below certain limits.
(d) The highest rate is applied to retained earnings.
(e) In addition to the corporate rate, there is a tax on residents ranging between 17.3% and 20.7% of the corporate rate plus a tax on the company ranging between 6% and 13.2%
Source: Mexican Investment Board, General Directorate of Income policy at the Secretariat of Treasury and Public Credit and Price Waterhouse.
Dividend distribution is not subject to the corresponding tax provided corporate tax on profits has been previously paid. 
II.- Royalties and Interest Taxes [top]
Payments related to royalties for technical assistance, patents, trade names, and trademarks are all subject to taxes ranging 15% or 35%.
The rate on interest paid ranges  10%, 21% or 35%.
These taxes may be deducted by the company when computing the corresponding income taxes, provided evidence is produced that those payments are related to the company's normal activities.
Taxes paid on royalties
I. 15% For the full or temporary use of copyrights on literary, artistic or scientific works, formulations or procedures and industrial, commercial or scientific equipment, and generally for technical assistance or technology transfers.
II. 35% For royalties paid for the full or temporary use of invention or improvement patents or certificates, trademarks and trade names, and for advertising.
Interests paid abroad 
I. 10%, as paid: 
By Financial entities owned by foreign governments (development banks, Eximbanks)
By Foreign banks, including investment banks
Institutions investing in the country capital from credit instruments issued and placed abroad for the public at large
For placing bonds, debentures or bankers acceptances abroad
II. 21%, as paid: 

By Credit Institutions abroad other than those listed in I above
To foreign vendors for machinery and equipment purchased as fixed assets by the purchaser
To foreigners to finance machinery and equipment purchased and generally for working capital, marketing or to purchase fixed assets
III. 35% 

On interest not contemplated under I and II.
Note: Interest rates in 1997. These are reviewed every year.
III.- Value Added Tax [top]
The rate applicable to the value added tax is generally 15%.
Some major exceptions apply, namely exports of goods and services and the sale of basic staples and drugs. In this case, the rate is zero.  
State and municipal taxes are also applicable. Payroll taxes are paid in 18 states ranging from a low 0.9% in Baja California to a high 4.6% in Quintana Roo. Another major state and municipal tax is the property tax imposed on the use of soil, based on the property appraised value. The annual state tax for urban land ranges between 0.001 and 0.04 per thousand new pesos, depending on the state where the property is located.
Value Added Tax
Exempted Income 
On goods purchased or disposed of: 
Soil (land). Construction on the soil provided it is used for housing; otherwise it will be taxed  
Books, journals, magazines, copyrights; used personal property, except for that sold by stores; lottery tickets, all sweepstakes and contests, which are liable for income taxes  
Foreign or domestic currency, and gold and silver (troy ounces) bullion. Stock shares. Outstanding collection instruments. Credit instruments except for certificates of goods deposited. Gold bullion (99% ingots)  
On Services:  
Training services provided by decentralized agencies and private schools officially authorized or recognized  
Public land transportation, except for railroads  
Sea transportation of goods shipped by foreigners  
Services received or paid by credit institutions, credit unions and factring companies for financial operations and instruments discounted (not applicable to credit cards). In bond (maquila) companies  
0% Rate  
On goods purchased or disposed of:  
Non processed animals and plants. Meat. Milk, eggs and dairy products. Corn and nixtamal meal and wheat flour. Bread and tortillas. Vegetable oil and shortening  
Pasta. Coffee, salt, sugar, brown sugar, and molasses. Non carbonated water. Ice. Ixtle, palm. Tractors for agricultural implements, garden tractors, and plows  
Fertilizers, pesticides, etc. Goods used in food and patent medicines  
Independent Services:  
Services provided to farmers and stock breeders, provided they are allocated to agricultural and stock breeding activities. Corn milling and grinding. Milk pasteurization. Use of agricultural machinery. Exporting goods and services
[top]
[H0ME]  [INDEX] [Incentives] [Trust Funds] [Tax] [Trade] [Exchange] [Legal] [Labor] [Immigration] [Protection] [Corporations] [Steps]

Back
WORLDWIDE
OPPORTUNITIES
Next
mail to: manuel_lopez_l@oocities.com Email
This page hosted by: GeoCities Get your own Free Home Page
COPYRIGHT SAMLL ® 1997 - 1988 - MADE IN MEXICO BY: SISTEMAS Y ASESORIA MANUEL LOPEZ LEAUTAUD
LAST ACTUALIZATION: