VAT in Mexico

Updated on Tuesday 17th May 2022

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The VAT in Mexico (locally known as IVA) is payable at a general rate of 16% on the sales of products and services. The VAT also applies to lease payments and imports of products and services. In this article, our Mexico company formation agents make a brief overview of the VAT in Mexico.
 

Further details on the VAT in Mexico in 2022 

 
Temporary imports under IMMEX (an incentive program from the local government for companies which are manufacturing in the country and exporting products) and similar programs are also subject to the general VAT rate. 

 

 Quick Facts  
 We offer VAT registration services

Yes 

Standard rate

16%

Lower rates

8%, 0% 
Who needs VAT registration Local companies that supply goods and services in Mexico, as well as foreign companies that operate through a permanent establishment in Mexico. 
Time frame for registration not specified
VAT for real estate transactions

Charged at the standard rate of 16%. VAT in Mexico for real estate can also be charged at lower rates in certain situations (property lease in border regions). 

Exemptions available
in Mexico

For foodstuffs, agricultural supplies, books, magazines, insurance, land, cultural events.   

Period for filing On the 17th of the next month following the tax period end. 
VAT returns support  Yes
VAT refund  Yes, VAT in Mexico can be refunded to both individuals and companies. 
Local tax agent required not specified
Who collects the VAT The Tax Administration Service   
Documents for VAT registration  Certificate of incorporation, proof of business address, the power of attorney if the company has appointed a representative.
VAT number format The VAT in Mexico is comprised of 12 characters - 3 letters, 6 digits, and 3 alphanumeric characters.  
VAT de-registration situations not specified

 

 
Certain imports could qualify for a VAT exemption if they are able to obtain special certifications from the tax authorities in connection with the appropriate control of such imports.
 
This exemption comes in the form of an immediate VAT credit at the time when the products clear the customs, which implies that the temporary import is effectuated on a cashless basis. Our company formation consultants in Mexico can offer further details related to this matter. We can also help you open a company in Mexico.
 
The VAT acquitted by businesses on their purchases and operations connected to VATable activities, such as operations which are subject to a 0% VAT rate in Mexico, can generally be credited against their liability for the VAT. This can be achieved for the VAT they gather from clients on their own sales, rendered services and so on.
 
The input VAT credit on products or services of a general nature of a business is calculated based on a VAT ratio proportional to the VATable versus VAT operations, be it taxable and exempt, effectuated by the taxpayer. The same applies for those which are not specially identified with taxable or exempt operations for VAT purposes.
 
Creditable VAT acquitted on the purchases and expenses in excess of VAT collected from clients is recoverable through either a refund, offset against other federal taxes or a credit against the following VAT liabilities.
 

Exemptions from VAT in Mexico in 2022

 
In Mexico, there are numerous goods and services which are exempt from VAT, such as:
 
The sales of houses, except for the ones which are used for commercial purposes;
The retail sales of books, newspapers and magazines;
Currencies;
Financial instruments;
Gold which is at least 99% pure;
Other goods and services: our Mexico company registration advisors can offer more details on these.

Please mind that the new tax laws applicable in Mexico starting with 1st of January 2022 prescribe new regulations for VAT as well. For instance, taxpayers are no longer able to claim credit input for VAT related activities outside Mexico

Those who want to start a business here in 2022 must also know that they can enjoy from lower VAT rates, charged at 8% and 0%, in certain situations. 
 
For more details about the sales tax rate in Mexico, or for assistance in setting up a company in Mexico, please contact our friendly staff.