Mexico

Individual - Significant developments

Last reviewed - 12 February 2020

Since 2016, an overall cap on personal deductions has been in place. In 2020, they will be limited to the lesser of 15% of the year's taxable income or 158,469 Mexican pesos (MXN).

As of March 2016, there is an obligation for taxpayers in Mexico to maintain an electronic accounting system that consists of a catalogue of accounts, trial balance, and accounting entries for all of their transactions, as well as submit this information to the tax authorities through the Internet using an e-filing mailbox. This obligation was established in 2014 for taxpayers with total taxable income in excess of MXN 4 million who obtain rental income, income from business and professional activities, and income from the special tax incorporation regime. Starting in 2016, all individuals with these types of income are required to maintain and file electronic accounting reports, but a simplified method can be used if the taxpayer’s annual gross income is less than MXN 4 million. This measure will allow the authorities to have current information on operations conducted by taxpayers.

Since 2017, resident taxpayers are allowed to deduct un-reimbursed nutritionist and psychologist expenses.

As of 2017, the Measurement and Actualisation Unit (UMA in Spanish) replaces the minimum wage in tax calculations, limits, exemptions, etc as a unit of indexation. The UMA that corresponds to 2020 is MXN 86.88 per day.

With effect from 2019, a tax incentive has been established in the northern border region to strengthen the economy and increase investment in Mexico. The incentive may apply to individuals who operate unincorporated businesses in the northern border region with respect to their income from such businesses. Some exceptions apply. The incentive reduces the income tax payable in respect of such income by way of a tax credit. The value-added tax (VAT) chargeable by such businesses can also be reduced by the incentive.

Starting June 1, 2020, the income tax law establishes specific rules for collecting tax in relation to individuals who provide services via the digital economy as apps for transportation services, short term rentals and selling goods and services via digital market-places.