If you want to do business in Mexico, you have to know about taxation for a LLC, which is the most common legal entity in Mexico.
Mexican resident companies are liable to tax on their worldwide income. The predominant tax rate for offshore income, from our research, and this is not personal tax advice, is 30%. However, undistributed profits of a foreign subsidiary are not usually subject to Mexican tax until dividends are paid. A LLC in Mexico will pay CIT at 30% rate. This ranks Mexico as 136th when compared to corporate tax rate worldwide.
The VAT rate in Mexico is 16.00%, that ranks the country as 134th overall in terms of VAT taxation rate internationally. In terms of other taxation, an employer will contribute 7.58% to the equivalent of a social security fund and an employee will contribute 1.65%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 64hours. Contributing to this is the number of yearly labor tax payments, which is 2 in MX.
Thin capitalisation mandates are officially enacted. Thin capitalisation refers to any type of laws on given company with respect todebt-to-asset ratios.
Dividends received by a Mexico resident entity from another resident entity are exempt from corporate income tax. Dividends received from a foreign company are taxable, but a tax credit may be available for foreign tax paid. Dividends are payments of an earnings of the legal entity, passed by by the board, to shareholders. Dividends can be either stock, cash, or property.
Capital Gains are generally subject to corporate income tax at the standard rate. Capital Gains from the sales through the Mexican Stock Market may be taxed at a reduced rate of 10%. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
The dividends withholding tax rate is 10%. This means that the tax authorities expects companies to automatically withhold 10% of dividends remitted abroad. The interest withholding tax rate ranges from 4.9% to 35%. This means that the taxman expects legal entities to automatically withhold from 4.9% to 35% of payments abroad on interest payments. The royalties withholding tax rate may be 25% or 35% (patents and trademarks). This means that the tax authorities expects legal entities to withhold 25% or 35% of royalty payments offshore. Payments on royalties and interests to residents of jurisdictions considered tax havens are subject to a withholding tax of 40%.Withholding taxes may be reduced or eliminated under a tax treaty.
There is no known tax on wealth in Mexico. There are no known inheritance taxes. There are property and transfer taxes in Mexico. There are widely used research and development tax incentives in Mexico.
The above is not tax or legal advice for your particular situation. We can help you find to an expert in Mexico who will advise you. Want to work together? Click the free consultation button above or press incorporate now if you are in a hurry.
It takes approximately 170 hours to file and prepare documents for a Mexico Civil Law.
The corporate tax is approximately 30% which is 136 in the world.
Owners of a company in Mexico are not allowed to carry back a loss and may be allowed to carry forward a loss for 10 years.
The vat rate in Mexico is 16% which ranks 101 in the world.
When examining a jurisdiction in which to incorporate, the first thing to look at is the legal code. The underlying law in Mexico is civil law law. You will want to get some local advice as to how to best structure a company in Mexico. Electronic signatures are permitted.
The letters MX is for Mexico and the most common company type in Mexico is a LLC.
You should expect a wait time of 2-3 Days to incorporate a LLC in MX. The types of currencies you can use to setup your legal entity is often any legal currency.
Yes, one is allowed to re-domicile a LLC from MX. You are usually allowed to change the jurisdiction of the company, pending certain procedures.
There must be at least This means it is not possible for you to own a LLC in Mexico as a sole shareholder. You must have other shareholders, they can be nominees or de facto shareholders. Corporate Shareholders are permitted, which means you can have a legal entity as a shareholder. Foreign ownership is permitted, up to 100% of the total shareholding.
A legal entity is only required to have one director. Speaking of shareholders, corporate directors are not permitted. Directors are disclosed publicly. There is a requirement to have annual meetings of shareholders.
A registered agent is normally required, which means the company will have to pay a fee on a yearly basis, for an agent which can receive any lawsuit papers on behalf of the company. A related requirement, a company secretary is required by law.
There is a requirement to file accounts to relevant authorities. Consequently, there is oftentimes a requirement to have these accounts audited.
Thin capitalization rules are in effect. A company is thinly capitalised when there is a greater proportion of debt than equity. The minimum capitalization for a Mexico Civil Law is 50,000.00.
A corporate director is not permitted, meaning this country is not a good option if you are setting up a structure where you want to protect director liability.
The directors are disclosed in the public registry of Mexico, SIEM. Shareholders are disclosed in the SIEM.
Typically companies take 2-3 days to setup and there are 1 director(s) required and 2 shareholder(s) required at the time of incorporation.
Overall we think Mexico is a good option and have given it a score of 75 as an IO score, using the Incorporations.IO proprietary formula.
We can help you form a company in Mexico. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Mexico, which is required by law.
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