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SecretAgent69

Jul 13, 2009, 3:33 PM

Post #1 of 10 (4079 views)

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What are tax rates for Mexicans?

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Hi, I will be relocating to Mexico and will obtain Mexican citizenship. I have seen a lot of info here about tax rates in terms of expats living in Mexico, selling property, etc etc. but I havent been able to find the tax rates for Mexicans.

Could someone direct me to where I could find a chart or something that shows the graduated tax rates for Mexicans?

Ive even looked all over the net and on the SAT site, but couldnt find it.

Also, is the max tax rate 35% or 28% ? I have incomplete info that indicates 2007 tax reform dropped it to 28%?

SecretAgent69

Jul 13, 2009, 4:12 PM

Post #2 of 10 (4050 views)

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Re: [SecretAgent69] What are tax rates for Mexicans?

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Well, to answer my own question I did find this, but not sure how accurate it is:

"Personal tax rates apply up to a maximum rate of 28% in the case of
foreign residents. The following tax rates apply to Mexican residents " :

Monthly Taxable Income (MXP) Tax Due on Lower Limit (MXP) Marginal Rate on Excess (%)

Up to 496.07 0 3
496.08 – 4,120.41 14.88 10
4,210.42 – 7,399.42 386.31 17
7,399.43 – 8,601.50 928.46 25
8,601.51 and above 1,228.98 28

www.pkf.com/.../pkf/.../International%20Tax%20other%20attachments/Country%20Tax%20Guides%20in%20PDF/

Does anybody know what or if your allowable income is before you get taxed? You know, for example, how in Canada etc. you get an initial exemption of around 8000 dollars or something and any income after that is taxed.

Do they do the same in Mexico? If so, what is the amount of the initial exemption?

Aranza

Jul 13, 2009, 6:40 PM

Post #3 of 10 (3999 views)

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Re: [SecretAgent69] What are tax rates for Mexicans?

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Employees are now required to prepare annual tax returns when their salary exceeds $400,000 pesos (the ceiling was $300,000 in 2006). Tax liabilities of employees with salaries below the ceiling amount, are usually calculated by the employer and covered by payroll withholding, with no further annual tax return filing obligation.

However, even if the salary is less than $400, 000, the employee is required to file an annual income tax return unless the only income the employee receives is salary and inflation adjusted interest, and the sum total does not exceed $400,000, providing that the real interest portion does not exceed $100,000.

This was found on this web site http://www.maquilaportal.com/...ial/editorial437.htm

SecretAgent69

Jul 14, 2009, 2:18 PM

Post #4 of 10 (3915 views)

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Re: [Aranza] What are tax rates for Mexicans?

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"Tax liabilities of employees with salaries below the ceiling amount, are usually calculated by the employer and covered by payroll withholding..."

Thanks for the post. Unfortunately, it still doesnt tell me how much (ie. the percentage) of tax that must be paid at each level of income.

The link was interesting because it states that they will be trying to tax farmers more. I find this interesting because I will be doing that and the tax rate for agriculture is only 19 percent ! However, that link indicates they will increase the amount of tax farmers will have to pay. I find that criminal considering the poverty that exists in el campo.

Anyways, looks like there may be some big tax changes coming up in Mexico, especially when the oil revenues run out !

gpkgto

Jul 14, 2009, 2:37 PM

Post #5 of 10 (3907 views)

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Re: [SecretAgent69] What are tax rates for Mexicans?

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If you have a salaried job, your taxes will be deducted. The people I know who work like this do not file a return. If you have "outside" income, then you should file a return. You really need a Mexican accountant--they work pretty cheaply compared to US accountant--but you probably knew that. BTW--are you Mexican? Otherwise, citizenship is probably years away for you.

SecretAgent69

Jul 14, 2009, 3:22 PM

Post #6 of 10 (3899 views)

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Re: [gpkisner] What are tax rates for Mexicans?

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Hi, thanks for the comment. Yes, I am aware that employers automatically deduct from salaries, but havent been able to find the percentages. Seems, however (from the numbers I posted), that if you make any decent salary in Mexico (8601.51 or more per month) you will pay 28 percent tax.

I dont know if I will get an accountant or not. You see, the ranchers and farmers I know in Chiapas are in the informal economy and dont pay any taxes at all. Some have said that the tax man will visit on occaision (usually when the government changes). The taxman can be persuaded to go away with bribes though. In the end, I will probably get an accountant to work out the tax to pay since it seems the rate is quite low for farmers/ranchers.

Im not Mexican, but I have lived in Mexico for many years so can apply for citizenship now. Just out of the country at the moment.

tonyburton / Moderator

Jul 14, 2009, 4:28 PM

Post #7 of 10 (3885 views)

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Re: [SecretAgent69] What are tax rates for Mexicans?

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FWIW, for many years having a farm and declaring a loss was the classic way for large corporations in Mexico (think companies the size of Nestlé) to legally avoid paying very much tax at all. The Mexican tax system is extremely complex and the best advice given on this thread is that to hire an accountant. A good accountant will definitely more than pay for themselves in the long run.

SecretAgent69

Jul 14, 2009, 5:58 PM

Post #8 of 10 (3850 views)

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Re: [tonyburton] What are tax rates for Mexicans?

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Hi, yes I have heard of that loophole. There are huge banana plantations all around where I am. Huge. It would be unfortunate, however, if others got negatively affected because of that.

It would seem to me that cheating on taxes is relatively easy if one has a farm. It would be difficult for the government to accurately verify how much your income is considering you could low ball how much you made by claiming you had a bad harvest, X number of animals died, etc etc. Apart from that, they likely dont have the necessary resources yet to investigate too many people. There are probably a lot of big fish to fry first too. Apart from that, you always have the corruption "mordida" problem.

I suppose it would be wise for Mexico to do what they do in Canada and put the onus on YOU to prove you didnt make X amount of money as opposed to them proving that you did. Perhaps they do that already. I guess they probably have their formulas. They could look at how big your huerta is or how many animals you have and plug it into their formula to get a yearly income and whether you like it or not that is what you would pay.

However, even if you went legit, it would seem difficult to me considering so much of it is informal economy which means you cant possibly get/give receipts to verify your income and expenses. For example, I could hardly write off expenses for labour considering the fact that many of the ranch hands in that part of the country are actually illegals from Guatemala paid in cash.

My guess is that perhaps the government will setup some sort of deal where people who had previously not filed taxes, will get amnesty if they come out of the informal economy. If they are wise, they will also keep the tax rates low so that people will accept the tax. If rates are too high, people wont file because to be honest the Mexican government doesnt exactly have a good record of giving its citzens value for money. Many argue, why pay tax if the police are the bad guys, you need to pay private schools, private doctors, road cuotas ????

Marlene

Jul 14, 2009, 8:48 PM

Post #9 of 10 (3828 views)

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Re: [SecretAgent69] What are tax rates for Mexicans?

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How long have you been out of Mexico?

SecretAgent69

Jul 15, 2009, 1:10 AM

Post #10 of 10 (3805 views)

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Re: [Marlene] What are tax rates for Mexicans?

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Hi, no worries I know the rules for citizenship. I haven't been gone long enough to be disqualified.