Doing Business

Doing Business in Mexico 2015

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199 Doing Business in Mexico 2015 Chapter 23 Other indirect taxes Investor considerations • A specific tax is levied on transfers of real property and the rights thereto. • Excise tax is levied on certain items (e.g., alcoholic beverages, cigarettes, gasoline) and services (e.g. gambling and telecommunication), often at substantial rates. • Various state and municipal taxes are levied, generally at much lower rates, on items that are not subject to federal taxes. Tax on acquisition of real estate A local tax on the acquisition of real estate is levied on all types of transfers of real property and the rights thereto. In general terms, subject to the review of each state law or the Federal District Financial Code, this tax is payable by the person or entity that becomes the owner of the property, whether by purchase, donation, inheritance, contribution, merger, spin-off, liquidation, in trust, or otherwise. Real estate is defined as land or as land and the structures attached thereto. In the Federal District, the tax is calculated at a progressive rate; the maximum rate is about 4.9%, aside from the respective notary fees and other transfer costs. The tax base is the highest of the transfer price, the fair market value and the appraisal value of the property. Notary fees and other transfer costs often increase the purchase price by two or more additional points. Federal excise and vehicle taxes The Production and Service Tax Law levies often substantial federal excise taxes on the supply of alcoholic beverages, cigarettes and other tobacco products, gasoline and diesel, energy and flavored drinks, fossil fuels, food with high caloric content and pesticides; as well as commission services related to the mentioned products, gambling and telecommunication services. In general terms, exports of goods are exempt from excise tax and excise tax paid on the acquisition of exported goods cannot be credited. Federal taxes are also levied on the acquisition of new vehicles, as well as the ownership of motor vehicles. 24

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