Foreigners must comply with tax obligations, depending on whether they are tourists, digital nomads or entrepreneurs.
Mexico is estimated to be home to more than 1.2 million foreign residents, most of them of American origin. And many of them contribute to the country’s growth and development in different ways, including paying taxes.
The taxes that foreigners can pay in the country will vary according to their immigration status and economic or business activity.
What taxes do foreigners pay in Mexico?
Consumption tax
Like any visitor or resident, a foreigner who consumes goods or services in the country is subject to the Value Added Tax (VAT), which is paid automatically, explains accountant Roberto Colín, member of the College of Public Accountants of Mexico (CCPM).
The VAT they pay in Mexico can be recovered at customs, before leaving Mexico, with the corresponding tickets. This is an advantage for any international tourist in almost any country in the world.
Foreigners with permanent residence
When a foreigner has permanent resident status and works under the salaried regime, fees for professional services, among others, he or she is subject to paying taxes in terms of the Income Tax Law (ISR), like any other taxpayer.
Digital nomads
They are those who “are not tax residents, but obtain income from a Mexican source of wealth. If this is the case, there is an ISR payment, but there is a specific title, title V, for residents abroad, without tax residence and without a permanent establishment in Mexico and for each activity there is a different withholding rate,” says the CCPM expert.
International treaties
There are criteria when there are free trade agreements such as the T-MEC.
“Those who provide professional services or with an employment relationship and if they do not exceed 183 days (of stay in Mexico) the tax is not paid here, it is paid in the country of origin,” explains Colín. This is with the objective of determining which country has the right to collect the tax and that there is no double taxation.
Foreign entrepreneurs
Those who come to Mexico and set up a company need to meet immigration requirements. But in terms of taxes, when a foreigner sets up a business, we are talking about having permanent residence. Either individually or through the incorporation of a company.
“Then they would have to pay taxes like any person with business activity in Mexico”: VAT, local taxes, IMSS, among others. In addition to complying with all associated obligations, such as periodic and annual declarations, issuance of CFDI, etc.
Source: expansion
