Corporate - Significant developments

Last reviewed - 18 January 2024

The majority of the Double Tax Treaties (DTTs) entered into by Mexico are covered by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) (the MLI), except for certain exceptions, such as Indonesia, which had not covered the tax convention with Mexico as covered under the MLI, and the United States of America, which decided not to join the MLI. The precise date the conventions covered by the MLI will be effective for Mexican tax purposes is yet unknown, as the Mexican Senate must conclude the approval process of the MLI.

In general terms, the 2020 and 2021 Mexican Tax Reforms were meant to incorporate fundamentals of the OECD BEPS initiative. The economic context in which these reforms were legislated assumes gross domestic product (GDP) growth of between 1.5% and 2.5%, and an increase in tax collection without the creation of new taxes, although the current expectations for economic growth have been affected due to the ongoing SARS-CoV-2 pandemic.

On 23 April 2021, the Mexican government enacted reforms of the Labour Law as well as different fiscal provisions. This reform prohibits the subcontracting of personnel services and aims for each taxpayer to directly employ its labour force without the intermediation of an in-house or outsource service provider, disallowing the deduction of payments for subcontracting services.