As tax period is currently in full swing, you may be wondering how this affects you as an expat in Mexico. If you’re a business owner in Mexico, you’re probably already aware that companies’ Annual Tax Declarations were due on 31 March 2018. However the dates for tax declarations for individuals are still coming up and need to be submitted by the end of April 2018. Therefore here, we tell you if and when you need to pay taxes as an expat in Mexico.

Do I Have to Pay Taxes in Mexico as an Expat?

As an expat in Mexico you have to pay taxes if you are considered a ‘resident’ and fulfil the following criteria:

  • You have received more than 50% of your income from Mexican sources or
  • Your centre of professional activities is located in Mexico (i.e. it’s your principal place of employment)

Individuals, who are not considered as residents can receive an income of 125,900 Mexican Pesos yearly. Any Income up to 1,000,000 MXN will be taxed at a rate of 15% and any amount above that will be taxed at a rate of 30%.

When Do I Have to Pay Income Tax as an Expat in Mexico?

The deadline for submitting a tax declaration as an individual in Mexico is 30 April 2018 and must be done by registering online at SAT. According to the local Tax Administration Service (SAT-Servicio de Administración Tributaria) Mexican residents have to pay income tax when they have obtained income from a Mexican source in any of the following ways:

By the end of April, Mexican residents should have finished their Annual Tax Declaration.

  • For providing professional services (fees)
  • By renting real estate
  • For carrying out business activities (commercial, industrial, agricultural, livestock, forestry, fishing, and motor transport), except those that are taxed in the Tax Incorporation Regime.
  • By selling property
  • By acquiring goods
  • For receiving wages
  • From interest payments
  • Debts forgiven by the creditor or paid by another person,
  • For investments abroad
  • For default interest, and / or for conventional penalties, etc.

The income tax (ISR – Impuesto Sobre la Renta) varies between 15% and 30% for non-residents and 1.92% to 35% for residents, depending on your income.

How Can I Find Help Regarding Annual Tax Declarations in Latin America?

If you have any questions or enquiries about tax declarations, we from Biz Latin Hub can help you with our Team of experienced and skilled accountants. Do not hesitate to get in touch with our country manager Alex at [email protected] for more information.

Watch our video if you want to know more about our accounting services!