Doing Business

Doing Business in Mexico 2015

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114 Tax and Legal Services - PwC Mexico Classes of taxpayer Taxpayers are divided into four main groups for which, in addition to the rules of general application, separate sets of rules are provided, as follows. Resident corporations and other organizations taxable as corporations Resident corporations, permanent establishments of foreign corporations and all entities other than those non-profit organizations specifically so designated will generally be taxed in the same manner and under the same rules applicable to resident corporations. These include most privately owned business enterprises, sole proprietorships and professional service providers. These taxpayers are required to include all their income from all sources, with very few exceptions, in a single annual return (see Chapter 15). Resident individuals Resident individuals, whether Mexican or foreign, are subject to Mexican taxation on their worldwide income of all types, most of which must be included in an annual personal income tax return. Taxable income is subject to tax according to the graduated rate schedule shown in Appendix VII. There is special treatment for capital gains and domestic interest (also see Chapters 17 and 20). Nonresident corporations and individuals As discussed in Chapter 16, non-residents may be considered to have a permanent establishment for income tax purposes in Mexico under certain circumstances. In these cases the permanent establishments are taxed in the same way as duly registered branches of foreign corporations, basically following the rules for resident corporations. Non-resident Mexican or foreign individuals are taxed only on their Mexican-source income, at flat or graduated rates applied separately to different types of gross income without deductions, although under special rules they may elect to be taxed at higher rates on net taxable profits from sales of real property or capital stock or short-term construction and similar work. Generally, no overall annual return is required of non-residents. Non-resident individuals rendering personal services temporarily in Mexico who are employees of a non-resident corporation that does not have a permanent establishment in Mexico are exempt if their services are rendered for less than 183 days, consecutive or not, in any 12-month period. If the duration of their services exceeds 183 days, they are subject to tax as described in Chapter 20. Non-resident individuals who render personal services temporarily in Mexico directly to Mexican taxpayers are subject to a graduated withholding tax rate as discussed in Chapter 20.

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