Monthly and Annual Tax Filings

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Everything you need to know about Monthly VAT and Income tax Compliance

What are Corporate Tax Requirements in Mexico?

All legal entities in Mexico, including Limited Liability Companies and Corporations (Sociedad de Responsabilidad Limitada or Sociedad Anonima, respectively), must file monthly income taxes and VAT taxes. Corporate taxes in Mexico are filed electronically by way of the Mexican government’s tax system operated by the SAT or Servicio de Administración Tributaria.

Companies should not attempt to file taxes on their own and should contract the services of an accounting firm specifically experienced in the nuances of foreign-owned companies operating in Mexico. It is not practical for non-Mexican accountants to attempt to file taxes on their own, because the Mexican tax filing system and GAAP rules differ significantly from other jurisdictions.

Overview of Mexican VAT and Income Tax Obligations

Severance Pay
Aspect	Income Tax (ISR)	Value Added Tax (IVA)
Nature of Tax	Direct tax on corporate profits.	Indirect tax on consumption of goods and services.
Tax Base	Net taxable income = revenues − deductible expenses.	Value of taxable sales, services, leases, and imports.
Standard Rate	30%	16% (0% for exports and certain goods/services).
Scope	Applies to worldwide income for Mexican resident companies.	Applies to sales and services in Mexico; imports also subject.
Key Obligations	Calculate taxable income.- Make monthly provisional payments.- File annual corporate return.- Maintain tax records.	Charge VAT on taxable transactions.- Credit input VAT against output VAT.- File monthly VAT return.- Maintain electronic invoicing (CFDI).
Filing Frequency	Monthly provisional ISR and annual return.	Monthly return.
Deadlines	Monthly: 17th of following month.Annual return: March 31.	Monthly: 17th of following month.
Special Rules	Loss carryforward for 10 years.- Transfer pricing compliance for related-party transactions.	Digital services by non-residents must register and collect VAT.- VAT refunds possible if input VAT exceeds output VAT.
Documentati on	Accounting records, supporting invoices, transfer pricing reports if applicable.	Electronic tax invoices (CFDI) for all transactions to claim credits.

Do I need to pay income taxes or VAT taxes in Mexico?

If your company undertakes continuous and systematic business in Mexico, your income is subject to Mexican income taxes.
Foreigner companies must pay taxes in Mexico in the following common situations.

Here is a decision making flowchart to help you decide if you are subject to Mexican VAT and income taxes and should register an RFC ID.

Legal Basis
Step / Question	Yes → Action	No → Next Step	Legal Basis
1. Do you have a fixed place of business in Mexico? (office, branch, warehouse, factory, etc.)	You have a Permanent Establishment (PE) → Must register for RFC and pay ISR & IVA.	Go to Step 2.	ISR Law (Ley del ISR), Art. 2 & 16 – Definition of resident and permanent establishment.
2. Is the activity carried out physically in Mexico?(sales, services, leasing goods)	Must register for RFC → VAT and/or ISR obligations apply.	Go to Step 3	ISR Law, Art. 1 – Income from Mexican sources; VAT Law (Ley del IVA), Art. 1 – Taxable acts in Mexican territory.
3. Are you providing digital services to Mexican customers?	Must register for RFC → VAT obligations under digital services rules.	Go to Step 4.	VAT Law, Art. 18-B to 18-J – Non-residents providing digital services to recipients in Mexico.
4. Are you hiring employees in Mexico?	Must register for RFC → Payroll tax & social security obligations apply.	No RFC required, but you may still be subject to withholding tax on Mexican-source income.	Federal Labor Law, Art. 20; Social Security Law, Art. 15; ISR Law, Art. 96 – Employer payroll withholding duties

What is required to file Mexican Income Tax and VAT Tax?

Payment of corporate tax obligations is not possible as a foreign company without an RFC ID, which is the Mexican Tax Identification number. Obtaining an RFC ID in Mexico requires the incorporation of a corporate entity such as a Sociedad de Responsabilidad Limitada or Sociedad Anomima. Tax branches in Mexico are subject to the same requirements, obligations and establishment requirements as traditional corporations and are neither recommended nor practical.

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If you already have a Mexican Company, and need to file Income Tax and VAT in Mexico.

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If you already have a Mexican Company, and need to file Income Tax in Mexico.

If you already have a Mexican Company, and need to file Income Tax and VAT in Mexico.

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