Individual - Significant developments

Last reviewed - 23 July 2021

The deadline for filing 2020 personal income tax (PIT) returns and payment of any tax due was extended from 30 April 2021 to 31 May 2021.

During September 2020, an appeal court decision in Mexico City opened the possibility for foreign individuals leaving Mexico to seek a refund a part of their social security contributions which relate to pension and workers housing. The appeal court decision is a binding precedent only within the Mexico City area, although appeal courts in other jurisdictions within Mexico and the relevant authorities may follow the same criteria.

On December 9 2020 a reform that regulates and promotes teleworking as a form of labour organisation was approved, establishing rights and obligations for employers and employees. This reform entered into force on 12 January 2021.

On December 16, 2020 a decree was published that amends, adds and eliminates some tax provisions of the Social Security Law and Retirement Savings System Law. These will apply from January 1, 2023.

Since 2016, an overall cap on personal deductions has been in place. In 2021, they will be limited to the lesser of 15% of the year's taxable income or 163,467 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 2021 is MXN 89.62 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 1 June 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 marketplaces.