Methods of settling VAT by companies operating in Mexico

Mandatory company registration for VAT purposes

 In Mexico, there is no tax threshold that determines the need to register a company for VAT purposes. This means that this must be done regardless of the value of the sales transactions concluded for goods and services. To register, Mexico must be recognized as the entrepreneurs tax residence. This is not possible if income from professional activity does not exceed 50% in a calendar year. Company registration for VAT purposes is possible via a special government website.

Several VAT rates in Mexico - 16%, 8% and 0% 

Mexican standard VAT rate is 16%. A reduced rate of 8% is applied in the northern and southern border regions. Some goods are also zero-rated. These include, among others, basic food, medical and agricultural products. Transactions relating to the sale of land, books, newspapers, magazines, medical services and education are exempt from VAT. For this reason, before starting a business, it is worth reading a detailed list of categories and tax exemptions.

Method of submitting VAT tax returns 

In Mexico, great importance is attached to services in digital form. VAT returns in Mexico must be submitted on a monthly basis, by the 17th day of the following month. This should only be done electronically. VAT payments must be made within 30 days of the end of the quarter in question. It is worth noting that this method of settlement is attractive to many entrepreneurs, especially those just entering the market or expanding their activities beyond the traditional European Union market.

Electronic invoices in the CFDI system 

Mexico is also a country where the use of invoices in digital form is mandatory. For this purpose, a system called CFDI is used, which allows you to generate, download and store invoices. This is beneficial for companies that can use ready-made invoice templates, which will always include all important information for VAT settlement. Failure to comply with regulations related to documents in electronic form may result in the imposition of a penalty or fine, as well as delays in receiving payments.

Help from a specialized INTERTAX tax office 

Tax regulations in Mexico can be complicated for new entrepreneurs and are frequently changed. Thats why many companies cooperate with specialized tax offices such as INTERTAX. It is an office with extensive experience that offers tax settlement assistance in Mexico. Detailed Mexico VAT guide developed by INTERTAX can be found at: https://polishtax.com/mexico-vat-guide/. Thanks to this, entrepreneurs can be sure that all transactions concluded and documents issued will comply with local regulations and will not be exposed to additional costs while running a business.