Doing Business

Doing Business in Mexico 2015

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195 Doing Business in Mexico 2015 Sales of goods The law defines a sale as any transfer of tangible or intangible goods, including those made on a conditional basis or through irrevocable trusts. The taxable amount of a sale includes the sales price as well as all other amounts charged to the purchaser for other taxes, duties, interest, or charges of whatever nature. Services Taxable services are considered to be those rendered within Mexico by one person to another on an independent basis, transportation of persons or goods, insurance and reinsurance, agency activities, technical assistance, and transfers of technology. The taxable amount includes not only the price of the service, but also charges to the customer for other taxes, living allowances, expenses, reimbursements, interest, etc. As an exception, when the interest arises from loans granted by financial system companies, from loans granted under credit lines or financial leasing transactions, the VAT related to such interest will be paid as the interest is accrued, instead of when paid or collected. Rental of goods For purposes of VAT any type of rental of tangible property in exchange for a fee is taxable, regardless of the legal form utilized, subject to certain specified exceptions. Rentals of real property for residences and property used for agricultural purposes are exempt. Imports VAT is payable by the importer to the customs authorities on all imports, in addition to normal import duties. The taxable value of imports of tangible goods is the value declared for import duties, plus the amount of the duties and other applicable taxes and fees. The VAT paid to customs authorities upon importation of goods is treated in the same way as VAT paid to Mexican suppliers and offsets the VAT liability collected from customers in determining the net amount owed to the government. Any tax payable on importations is entirely the responsibility of the resident importer, and in the case of imports of tangible assets, VAT must be paid before withdrawing these assets from customs. Imported services are also taxed. The purchase or licensing of intangible assets from non-residents for use in Mexico is a taxable import. In the case of importations of intangible assets or services, no VAT is actually paid, although the tax forms reflect a ¨virtual¨ payment or cashless transaction with an offsetting credit in the same monthly return, except when the taxpayer also has "exempt" VAT sales output tax transactions in which case there could be a net cost to the company after reflecting the tax effect of deducting the VAT paid. 23

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