Types of Taxes in Mexico

Types of Taxes in Mexico

The taxes in Mexico are paid in two ways: one is every month and the other is annual. The types of taxes in Mexico are basically three: federal taxes, state taxes and municipal taxes.


The types of taxes in Mexico

Mexican citizens and taxpayers have rights and obligations. The obligation to pay taxes is a way to contribute to public spending. There are different types of taxes that are paid in Mexico, such as: ISR, VAT and IEPS.


What is SAT?

It is the Service Tax Administration (SAT), it has the character of a decentralized body of the Ministry of Finance and Public Credit (SHCP) that is responsible for applying tax and customs legislation, and to ensure that individuals and corporations (entities) pay their respective taxes by contributing to the public expenditure of the state through the collection of said taxes, as well as the responsibility for the design and evaluation of the tax policy in Mexico.


Federal taxes, State taxes and City taxes

In Mexico, there are 3 types of taxes Federal, State and Municipal taxes, such as the following:


Federal Taxes

  • Income Tax (ISR): It is a tax applied to the income acquired, except for inheritances and donations. It is a type of direct tax, since it directly taxes the sources of wealth. Indirect taxes are responsible for taxing consumption such as VAT and IEPS. While the ISR is applied to individuals and legal entities and residents abroad who receive income from Mexico. The ISR rate is not fixed, since it varies between 30% for Entities and for Individuals up to 35%.


  • Value Added Tax (IVA): This is a type of lien, being an indirect tax, taxpayers do not pay it directly, being transferred or collected by a third person, until it reaches the final consumer. The rates for IVA are: 16% for the whole country with the exception of the border cities in which the rate will be the 8%, rate 0% and non-taxable.


  • Special Tax on Production and Services (IEPS): This tax applies to the production, sale or import of gasoline, alcoholic beverages, beer and tobacco. Being in this case a tax covered by manufacturers, producers or importers of gasoline or diesel.


Types of Taxpayers

When paying there are types of taxes as taxpayers.  The due dates to pay will depend on the type of taxpayer.

Individuals: Any human person registered with the Ministry of Finance and Public Credit (SHCP) that has the capacity to contract obligations and exercise their rights. For the SAT (Tax Administration Service), a Treasury agency whose task is to collect taxes, Individuals are those who carry out activities that generate income, including providing professional services, commercial activities or working for a salary. It will depend on the activity that they carry out, the taxes to be paid, the profile of economic activities is what establishes the tax regime in which they appear and, the payments and contributions to be paid.


Entities: For the SAT, Entities may arise from the union of one or more Individuals with a certain purpose, contracting obligations and rights.


State Tax

State taxes are only applicable within the border of each state and do not transfer to others. In this sense there are many different for each of the states of Mexico.

An example of this is the payment of vehicle ownership, which some states apply, and others do not.

Other examples of taxes paid in some states are:

Payroll tax

Tax on entertainment and public entertainment

Tax for the Provision of Hosting Services


City Taxes

Property tax

Property Acquisition Tax and Transfer (or transfer) of Domain

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