Mexico

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 26,914. The employer’s maximum annual contribution is MXN 188,657 (considering a low-risk company). 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 989,672 per year (or MXN 82,473 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 118,819). 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. 

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.