Mexico

Individual - Other taxes

Last reviewed - 12 February 2020

Social security contributions

Employee contributions to the Mexican Social Security Institute are withheld at source. The employer also makes contributions. Both contributions are calculated at varying rates and subject to various limits based on multiples of the UMA.

The maximum annual contribution for employees is MXN 21,628. The employer’s maximum annual contribution is MXN 134,649. The employer limit could be higher, considering that the employer's portion includes the occupational risk premium, which varies depending on the activity of the employer. These maximum contributions apply to employees earning more than MXN 794,952 per year (or MXN 66,246 per month).

Consumption taxes

Value-added tax (VAT)

VAT is payable at the general rate of 16% on sales of goods and services, as well as on lease payments and imports of goods and services. See Other taxes in the Corporate tax summary for more information.

In the case of the northern border region, a tax credit of 50% on the VAT rate may apply, resulting in a rate of 8% instead of 16%.

Net wealth/worth taxes

There are no net wealth/worth taxes in Mexico.

Inheritance, estate, and gift taxes

There is no specific inheritance, estate, or gift tax in Mexico. Inheritances and gifts are treated as income under the income tax law, but may be tax exempt as described below.

Income received by a Mexican resident through inheritance is exempt from income tax.

Income received as a result of a gift from a spouse, lineal ancestors, or lineal descendants is also exempt. However, gifts between siblings are not exempt, and gifts to parents are not exempt if the asset is later given or sold to a sibling of the original owner.

Other gifts are tax exempt, provided the gift does not exceed three times the annual UMA (MXN 95,081). Any portion of the gift exceeding this amount would be subject to income tax.

Property taxes

Annual taxes on real property are levied by Mexico City and all the states at widely varying rates applied to values shown in the property tax records. Assessed values have increased substantially recently in Mexico City and some other areas.

Payroll taxes

Most Mexican states levy a relatively low rate of tax on salaries (but not on income in general), which in most cases is payable by the employer. For example Mexico City, imposes a 3% payroll tax, but it is payable by the employer and constitutes a tax deductible expense for the employer.

Cash deposit tax

Since 2014, cash deposits into the Mexican financial system in excess of MXN 15,000 per month are no longer subject to a 3% WHT. However, financial institutions are still obligated to report to the Mexican tax authorities information regarding who received such deposits.