In addition to the main incentive programs available to companies in Mexico that help businesses save money on export taxes, tariffs, and duties we discussed in a recent article, there are also various tax incentives you will also want to take advantage of. Due to the complexity of tax laws and because every situation is unique, it is a good idea to work with a provider of shelter services in Mexico to ensure you get the maximum savings possible.
In Mexico, there are three main taxes all companies operating under their own legal entity will have to pay: VAT or value-added tax, ISR or income tax, and employee profit-sharing. The first, VAT, is a standard 16% tax payable on all sales of goods and services, lease payments, and imports of goods and services in Mexico.
Companies enrolled in the IMMEX program, and VAT certification can defer or eliminate VAT for temporary imports, maquila services, and even acquisitions from local suppliers in some instances. Additional incentives and deductions are also available on VAT, and companies can apply for refunds for various concepts and deductions. However, the process is complicated and takes 90-120 days to receive the refund. On the other hand, by working with the American Industries’ shelter, companies can operate exempt from import VAT tax on machines or raw materials imported as well as local expenses, including leases, electricity, packaging, and cafeteria services, among others.
Companies working under a shelter will also save on ISR (income tax). Companies that operate under a shelter non-incorporated model are not required to set up their own legal entity in the country. This means they do not technically have income in Mexico, and the 30% tax does not apply. Instead, companies will pay tax under one of two options: an APA or advanced pricing agreement or safe harbor methodology.
The last tax companies in Mexico must pay for employee profit-sharing (PTU). Enterprises are required to pay 10% of their taxable income yearly to workers. Again, this tax does not apply to companies working under a non-incorporated shelter as they are not legally established in the country. Even though they are exempt from profit-sharing payments to employees, it is still recommended that companies provide a bonus to employees at the same time of the year other companies pay PTUs instead of profit sharing to keep employees happy.
All companies want to make the most of tax savings available to them, and these are just some available to companies operating in Mexico. Due to the complicated nature of tax law and working in a different country, you will want someone with in-depth knowledge of the law and tax codes on your side who can ensure you get all the additional incentives and cost savings possible. If you would like to find out more about the tax incentives your company is eligible for in Mexico, don’t hesitate to reach out to talk to one of our experts today.
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