Mexico taxes residents on worldwide income and non-residents on Mexico-source income only. Mexico operates a self-assessment system: taxpayers calculate and file their own return, with the tax authority (Servicio de Administracion Tributaria, SAT) conducting risk-based audits and reviews after filing rather than issuing a prior assessment.
The Mexican tax year is the calendar year. The individual filing deadline is 30 April of the following year; corporate filing deadline is generally 31 March of the following year.
Mexico's headline corporate income tax (CIT) rate is 30%.
The headline personal income tax (PIT) rate is residents up to 35%; non-residents up to 30%.
The standard VAT/GST (or equivalent consumption tax) rate is 16%.
Under Article 9 of the Federal Tax Code (Codigo Fiscal de la Federacion), Mexico does not use a simple day-count rule. An individual is a Mexican tax resident once they establish a permanent home (casa habitacion) in Mexico; if they also maintain a home elsewhere, residency turns on their "center of vital interests" - generally deemed to be in Mexico if more than 50% of total income is Mexican-sourced, or if the person's main professional activities are based in Mexico. Mexican citizens who relocate to a jurisdiction Mexico treats as a preferential tax regime (REFIPRE) remain Mexican tax residents for the year of departure plus the following five years, unless that jurisdiction has an information-exchange agreement with Mexico. Anyone leaving Mexican tax residency must file a formal change-of-residency notice (aviso de cambio de residencia fiscal) at least 15 days before departure, or the SAT continues to treat them as resident.
A non-Mexican entity has a Mexican permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Mexico on the entity's behalf, following the OECD Model Treaty definition as applied under Mexican domestic law and any applicable tax treaty.
Rather than a conventional CFC regime, Mexico uses the Preferential Tax Regime framework (Regimenes Fiscales Preferentes, Articles 176-178 of the Income Tax Law). Foreign income is subject to REFIPRE treatment where it is either not taxed abroad, or taxed at a rate below 75% of what the same income would have borne under Mexican tax law - assessed case-by-case by comparing the foreign effective tax burden to the hypothetical Mexican liability. Where REFIPRE applies to a non-transparent entity, the Mexican resident must include the entity's income in their own taxable base in the year it is generated, proportional to their participation, regardless of distribution.
Interest paid by a Mexican resident to a non-Mexican related party is non-deductible to the extent the debt exceeds a 3:1 debt-to-equity ratio, calculated using average balances under Mexican GAAP or IFRS (with an alternative computation available using capital-contribution and net-tax-profit accounts, which if elected must be used for at least five consecutive years). Certain debt financing productive infrastructure in strategic sectors, or held by regulated financial-sector entities, is excluded from the computation. Separately, net interest exceeding 30% of adjusted taxable profit is also non-deductible under a BEPS Action 4-style rule, and interest paid to a related party in a REFIPRE jurisdiction can face a 40% withholding rate.
Mexico does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics under Mexican law, though Mexico has specific rules addressing the classification of foreign transparent entities (entidades extranjeras transparentes) for Mexican tax purposes. Mexico has implemented anti-hybrid provisions denying deductions for payments to related parties that are not subject to tax, or are subject to a preferential tax regime, in the recipient's jurisdiction - a Mexico-specific mechanism addressing similar policy concerns to ATAD2 without being a direct EU-style transposition.
No foreign bank account or foreign financial asset reporting regime exists in Mexico requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Mexico provides limited participation-exemption-style relief primarily through its REFIPRES (preferential tax regime) and foreign tax credit rules rather than a broad European-style exemption; dividends from a foreign subsidiary are generally includible in Mexican taxable income with a credit for underlying foreign corporate tax available in specified circumstances, rather than being outright exempt.
Mexico has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Mexico, capped at the Mexican tax otherwise due on that income, with specific rules addressing credits for underlying corporate tax paid by a foreign subsidiary on dividends distributed to a Mexican parent.
Mexico maintains double tax treaties with 60 countries. Mexico has no treaty with Egypt, Iran, Lebanon, Malaysia, Morocco, Nicaragua, Oman, Pakistan, Slovenia, Thailand, or Venezuela; a treaty signed with Guatemala in 2015 remained pending ratification and not yet in force as of the most recent verification. Mexico ratified the OECD's Multilateral Instrument (MLI), effective July 1, 2023, which modifies most of its treaties - notable exceptions include the United States (which did not sign the MLI) and Germany (whose treaty changes are instead implemented via a bilateral protocol).