Structures for US companies operating in Mexico: If you plan on having members of your company operate in Mexico or you plan to set up a physical business in Mexico it’s very important that you know about the different structures that US companies operating in Mexico can take on. These structures are important to consider as each of them will have their very own tax rate which could lead to a significant chunk of your income being lost.
Some of the standard structures for US companies that are commonly taxed in Mexico include:
Companies with manufacturing agreements
Standalone physical operations
Regional clusters or agents
Owned or leased warehousing facilities
Corporate tax rates in Mexico:
If you are a corporation that plans on operating within Mexico you may be interested to know that it has one of the highest corporate tax rates available in the world. Corporate tax rates in Mexico range between 28% to 30% but a payroll taxes also issued as a credit meaning that any of the employees that you need to regularly pay to work in Mexico could count as a credit against your total profits or income.
If one of your employees operates within Mexico for 183 days within a 12 month period, you could be subject to paying not only this 28 to 30% tax rate but also a tax rate in your home country about race or the country where your main headquarters are located. Be sure to consider these corporate tax rates when doing any type of business throughout Mexico.
Mexican taxation of dividends, interest and royalties:
If you are earning money off of loan interest, dividends or cash royalties in Mexico there is also a chance that you will need to pay some form of taxation. Just like any good company, investment experts and individuals will be forced to pay taxes on any of the money that they may or while they are a resident of Mexico. If you receive royalties or investment income from Mexico you may also be subject to withholding taxes.
A good example of this holding tax comes with royalties. Any royalty paid out to a nonresident of Mexico could be subject to a 25% tax or a 30% withholding tax on patents and trademarks. Unless a tax treaty is put in place and the rate is reduced, any leasing of machinery or royalties are subject to this fee. Companies that distribute dividends to nonresidents may also be responsible for paying a 10% withholding tax within Mexico. Unlike some North American nations Mexican entities aren’t subject to any type of tax treatment on capital gains but interest taxation to nonresidents could be also subject to withholding taxes. The withholding tax rate on interests ranges between 4.9% and 30%. It’s very important to keep these ideas in mind to keep your finances in order if you plan on doing business within Mexico or staying within Mexico as you work worldwide.