Doing Business

Doing Business in Mexico 2015

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196 Tax and Legal Services - PwC Mexico Services rendered by non-resident commission agents outside Mexico (commissions) on exports of merchandise are not subject to VAT. In other cases, imported services are subject to VAT as described above. Importations under the temporary regime are currently exempt from VAT. However, as from 2015, temporary importations made under specific customs regimes, such as those to be used in manufacturing processes by in-bond processing companies and for the automotive bonded warehouse regime will in principle be subject to payment of VAT. A tax credit may be available complying with specific requirements. Other temporary importations remain exempt from VAT (e.g. for the oil or aerospace industry). Exports Exports are zero rated, and consequently VAT is not payable on exports, including exports of in-bond processing companies, commissions or mediation fees and technical fees for services provided to foreign residents when the benefit is received abroad, and rights to intangible assets. Even though the exporter does not collect VAT on export sales or these services, it has the right to recover input VAT charges on its purchases of goods and services by means of a credit or refund. Additionally, a zero rate applies to independent personal services provided by residents in Mexico that are used solely by and for the benefit of persons abroad without a permanent establishment in Mexico. Port services are also zero rated for export shipments. Rate of tax VAT is payable on all types of operations at a general rate of 16%, except for almost all food products, medicines and other specific products, which are taxed at the zero rate. Payments of tax The excess of VAT effectively collected from customers over VAT effectively paid to vendors (or to the customs authorities on imports) is generally required to be remitted to the tax authorities on a monthly basis as a definitive payment. The procedure for determining VAT payable consists of crediting directly against VAT due (effectively collected), the tax effectively paid for expenses related to acquisitions of goods and services, as well as expenses related to the temporary use of assets (i.e. rentals). Such expenses should be those that are indispensable for realizing taxable activities, including those that are taxable at the zero rate. When taxpayers carry out mixed activities (taxable, exempt or not taxable), they should identify VAT effectively paid for each item, in order to determine the amount not creditable paid on non-taxable items, as well as determining the proportional amount not creditable, from items not identifiable.

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