Mexico VAT

Mexico introduced a Value Added Tax regime in 1980. Locally, it is known as Impuesto al valor agregado (IVA). It is administered by the Ministry of Public Finance and Credit.

Mexican VAT rates

Mexico has a range of VAT rates, including:

  • Standard VAT rate: 16%
  • Borders Reduced VAT rate of 11% was dropped in 2014
  • Zero Rated Supplies: foodstuffs; water; agricultural supplies; books and magazines
  • VAT Exempt Supplies: immovable property, land, financial services, insurance, cultural exhibitions and events, imports

Should I register for Mexican VAT

Businesses which supply taxable services or goods must register for Mexican VAT. This includes foreign companies with a permanent establishment. Foreign companies without a permanent establishment may not register as a non-resident trader, and cannot reclaim Mexican VAT.

Mexican Covid-19 VAT rate cuts

Mexico is to consider temporarily cuting VAT to help support businesses and consumers during the Coronavirus pandemic crisis.

Supply

Old rate

New rate

Implementation date

End date

Standard rate

16%

10%

TBC

TBC

Mexico VAT rates

Rate

Type

Which goods or services

16%

Standard

All other taxable goods and services

8%

Reduced

VAT at Southern and Northern border regions

0%

Zero

Exports; certain basic foodstuffs such as milk, wheat, meat and corn; medicine; some agricultural services

Mexican VAT returns

VAT returns, detailing sales and purchases, must be submitted on a monthly basis. The should be filed by the 17th of the month following the period end, and any tax due paid by this date too. Returns are filed electronically only.

VAT credits may be rolled over into future months, but may also be credited back.

Annual returns are also due. In addition, monthly purchase listings must be submitted (Declaración Informativa de Operaciones con terceros.

Mexican Invoice Requirements

Like a number of countries in South America, Mexican businesses are required to issue invoices on officially produced and endorsed invoices. Although since 2011, electronic invoices may be used for larger businesses, and special digital certificates must be obtained. When issuing invoices, companies must include the following information on any invoice:

  • Name, address and tax ID number of the supplier
  • Date and place of issue
  • Description (including quantises) of products or services
  • Customer details
  • Detailer of customer documentation for imports
  • Pricing and VAT details
  • Central Bank of Mexico exchange rate if in a foreign currency

Credit notes, to revert claimed VAT, must contain all of the same information.

Other resources

This guide covers the essential steps ecommerce sellers need to take now that the UK has left the EU Customs Union and VAT regime to keep their cross-border sales going, avoid extra tax costs and frustrated customers.

Read the report to learn about key industry trends, emerging issues, and challenges faced by cross-border sellers and shippers.

Manage international tax with cross-border solutions for VAT, HS code classification, trade restrictions, and more.

Connect with Avalara for the content you need to do tax compliance right