Accounting Services in Mexico

Required Tax Filings

Provisional Monthly VAT Filing
Both S.A. de C.V.s (Corporations) and S. de R.L.s (Limited Liability Companies) are taxed as Corporations. In other jurisdictions, such as the United States, Limited Liability Companies may be taxed as either partnerships or corporations. Companies are required to file tax returns with Hacienda by May 31st of every year and also pay any tax liabilities they owe at the same time. Mexico charges stiff penalties with interest on any back-taxes. Be aware that new companies must file by December 31st of the year in which they begin operations.

Provisional Monthly Income Tax Filing
Both S.A. de C.V.s (Corporations) and S. de R.L.s (Limited Liability Companies) are taxed as Corporations. In other jurisdictions, such as the United States, Limited Liability Companies may be taxed as either partnerships or corporations. Companies are required to file tax returns with Hacienda by May 31st of every year and also pay any tax liabilities they owe at the same time. Mexico charges stiff penalties with interest on any back-taxes. Be aware that new companies must file by December 31st of the year in which they begin operations.

Provisional Monthly Informational Filing
Perhaps unusual among many countries, Hacienda requires companies to disclose details about their suppliers, customers, and value of transactions with each. For example, a company must record the names and additional information for each and every company it has sold products to or otherwise done business with. Informational returns must be filed by the February 15th of every year.

Annual End-of-Year Income Tax Declaration
Both S.A. de C.V.s (Corporations) and S. de R.L.s (Limited Liability Companies) are taxed as Corporations. In other jurisdictions, such as the United States, Limited Liability Companies may be taxed as either partnerships or corporations. Companies are required to file tax returns with Hacienda by May 31st of every year and also pay any tax liabilities they owe at the same time. Mexico charges stiff penalties with interest on any back-taxes. Be aware that new companies must file by December 31st of the year in which they begin operations.

Annual End-of-Year Sale Tax Declaration
Both S.A. de C.V.s (Corporations) and S. de R.L.s (Limited Liability Companies) are taxed as Corporations. In other jurisdictions, such as the United States, Limited Liability Companies may be taxed as either partnerships or corporations. Companies are required to file tax returns with Hacienda by May 31st of every year and also pay any tax liabilities they owe at the same time. Mexico charges stiff penalties with interest on any back-taxes. Be aware that new companies must file by December 31st of the year in which they begin operations.

Types of Taxes in Mexico

There are primarily three taxes all companies are required to pay: the Value Added Tax, Income Tax, and Corporate Flat Tax. A special products tax may require filing for producers of tobacco, alcohol, and firearms-related products. Failure to comply with these requirements can result in stiff penalties for your company. All of these filings must be made monthly even if your company has made no profits or otherwise been inactive during the past month. (This is why it is so important to properly dissolve your company when winding up the business. See our section on dissolutions here)

MexicanIncorporation.com allows your company to remain in compliance fast and easily. Just scan and send your company’s financial documents to us and we handle the rest! We invite you to talk to our lawyers and accountants on staff.

Value Added Tax
Companies must submit monthly reports of their value-added tax (sales tax) obligations. All sales of goods and services in Mexico are taxed at a rate of 16% unless an exception applies. In border areas, some transactions are taxed at 11% while food and medicines may receive different tax rates. The Mexican value-added tax is federal and not administered by the individual Mexican states.

Corporate Income Tax
Companies must submit monthly reports of their corporation tax obligations. Corporations are taxed at the following rate: 30% from 2010 to 2012, 29% in 2013 and 28% from 2014 on. The corporation tax is due by March 31st every year.

Special Sales Tax on Production and Services (IEPS)
Is an indirect tax due at point of sale upon certain types of products falling into the following categories: alcoholic beverages, tobacco, petroleum, hydrocarbons, soft drinks, and energy drinks. The amount of the tax varies considerably and in some cases is calculated by unit sold as fixed amount or as a percentage of the price of sale. The tax is assessed at the moment of sale and applies only to products for national consumption – not to exports.

How to obtain an RFC number in Mexico

Recent reforms to Mexico’s Federal Fiscal Code have obligated many foreign companies that deliver products and services by way of online digital platforms, like Amazon, Uber and Airbnb, to register in Mexico to do business. Unfortunately, the Mexican government did not make any meaningful attempts to ease this burden or bureaucracy on foreign businesses making it simpler to obtain an RFC number or VAT registration.

The truth of the matter is straightforward – getting an RFC number involves either incorporating a local legal entity in Mexico or registering what equates to a local branch office in Mexico for your company. There is no other way. This process cannot be handled online and involves sending a trove of documents to Mexico that must be registered before the proper authorities.

Let’s walk through an example, step by step, with a hypothetical situation. Our company, Bicentennial Group, is incorporated in Delaware as a limited liability company. Say for a moment that we decide to get an RFC number for our Delaware company so it can comply with local VAT rules. This is of course hypothetical, as our firm is already incorporated in Mexico as well as the United States.

First, we have to order certified copies of all corporate formation documents including our certificate of formation and a certificate of good standing from the Delaware Secretary of State. These documents represent that the company actually exists. Next, we have to execute a power of attorney from the company to our local Mexican attorney who will complete the process in Mexico. This can often be done in a dual-column English and Spanish document. The power of attorney will need to be duly signed and notarized in the United States by a manager or officer of the company. In some cases, it will also be necessary to obtain a certified copy of the company’s operating agreement or by-laws to demonstrate signing authority. This of course depends on how the company has been structured.

Once all of this is done, every single document will need to obtain an apostille. If you do not know what an apostille is, it is basically a certification issued by the Secretary of State or Ministry of Foreign Affairs of the country where the document was issued, affirming its authenticity for use in a foreign country. For more information, you can review material concerning the Hague Convention which abolishes the requirement for legalization and authentication of official documents. Some countries are not members of the Hague convention and therefore an apostille cannot be used. This is the case for many countries, including mainland China and Canada. Instead, the document must first be authenticated by the domestic authorities and taken for legalization at the local Mexican consulate or embassy. For example for a Chinese company registered in Beijing, you would have to obtain certified copies of the company’s business license and powers of attorney… etc as stated above, then have those documents authenticated by the provincial authorities and subsequently taken to the consular section at the Mexican Embassy in Beijing to be legalized for use in Mexico.

So, that was just the first step. Once all documentation is in hand, it will need to be forwarded to your attorney in Mexico for step two. All the documents will need to be translated in Mexico by a licensed translator. Using your own foreign translator is not an option according to Mexican law. The company must then seek authorization from the Mexican Secretary of the Economy to be registered and do business in Mexico. The authorization is processed online and will result in your being issued an affirmative authorization letter displaying your corporate details. This does not issue you an RFC number. There is still more work ahead.

The company’s documentation must go through a process called protocolization, which means that they are taken before a notary, transcribed and certified as part of the public record before the local Public Registry of Property and Commerce or Registro Publico de la Propiedad y del Comercio. The documents cannot be legally used in Mexico until this process before the notary is completed. Keep in mind here that one of the documents you should have obtained is a power of attorney for your local attorney or representative in Mexico to complete the registration. Only after this step can we proceed to the third and final step, obtaining the VAT registration or RFC number.

Before obtaining the RFC number, you will need to have a registered office or virtual office space secured. Your legal representative will need to make an appointment to obtain the RFC number with the local tax office and bring copies of the contract for the local registered office and notarized deed issued by the Mexican notary. At this point, the company is legally authorized to do business in Mexico with a valid RFC number and VAT registration.

Beware that this process is basically the same if you choose to incorporate a subsidiary entity in Mexico, except you will also have to appoint a second shareholder. In Mexico all legal entities must have at least two shareholders. In either case it should be obvious from this reading that the paperwork burden is almost exactly the same. From a practical perspective, it may be a wiser decision to incorporate a subsidiary rather than only registering a branch for purposes of obtaining an RFC. This is especially true where the company will have a large number of operations, contract services, own property or engage in local partnerships. There are also tax implications that vary slightly for both options. For more information, feel free to contact our company. We are able to take care of the process for you.

Overview of Service

MexInc provides complete accounting services, which include presentation of monthly and annual tax declarations, calculation of balance sheets, processing of tax deductions, invoicing, and more. MexInc also strategizes with clients to minimize potential tax exposure including planning related to transfer payments, intra-company loans, dividends, intra-company services agreements, and other matters of specialized international tax strategy.

Our team of accountants will attend to all matters in the representation of the client before the tax authorities, renewal or maintenance of registrations, attend meetings with authorities, audit prevention, and responding to notifications.

You might also be interested in our: corporate formation services, payroll administration services, employee recruitment services, PEO services

Tax Declarations Filings
• Monthly income tax filings
• Monthly sale tax filings
• Monthly “DIOT” third-party operations reports
• Annual income tax filings
• Annual sale tax filings
• Annual “DIOT” third-party operations reports
• Trimestral supplementary tax filings

Tax Administration Services
• Processing of provisional payments of sales tax on client’s behalf
• Processing of provisional payments of income taxes on the client’s behalf
• Reconciliation of banks statements with cash flow and issued invoices
• Identification of applicable tax deductions
• Issuance of electronic invoices “facturas”
• Management of electronic accounting administration via Mexican Government tax system
• Local tax representative “representante legal” services
• Registered address and agent services

Prerequisites
• Legally incorporated Mexican company
• Registered company address
• Valid company e.Signature or e.Firma
• “.key”, “.cer”, .”req” electronic files

Pricing Starting At:
Overview of Basic Monthly Costs

$350 Accounting
$100 Registered Office and Registered Agent
Overview of Discounted Monthly Costs**
$200 Nominal “zero” monthly tax filings, registered office, registered agent service