Mexico Corporate Tax - Guide for International Expansion

Are you planning to do business in Mexico? Then it's essential to understand how corporate income tax works and what it means for your company.

In this guide, we'll break down everything you need to know about corporate taxes in Mexico, from setting up your business to staying compliant. Whether you're launching a new venture or expanding your business, understanding your tax obligations is key to running a successful operation. And if you're looking for smart ways to save money and manage international payments, we'll also show you how a Wise Business account can help simplify cross-border transactions and keep your finances running smoothly.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Mexico corporate tax rate in 2025

The standard corporate income tax rate in Mexico is 30% for resident companies.¹ This rate applies to all corporate profits and has remained consistent in recent years, positioning Mexico above the global average of approximately 23.5%.²

Mexico operates a territorial tax system for resident companies, meaning they are taxed on their worldwide income. Companies are considered Mexican tax residents if they are incorporated in Mexico or have their place of effective management in the country.¹ The 30% rate applies to both active business income and passive income such as dividends, interest, and royalties.³

Non-resident companies are subject to Mexican corporate income tax only on Mexican-source income, typically through withholding taxes. For example, dividends paid to non-residents are subject to a 10% withholding tax, while interest and royalties may be subject to rates ranging from 4.9% to 35%, depending on the type of income and applicable tax treaties.³

Mexico has signed numerous double taxation agreements with over 60 countries, which can reduce withholding tax rates for qualifying companies. These treaties are particularly beneficial for international businesses looking to minimise their overall tax burden while operating in Mexico.³

Read more about the corporate tax in United States

How to pay corporate tax in Mexico

Companies operating in Mexico must navigate the country's tax system through the Mexican Tax Administration Service (Servicio de Administración Tributaria - SAT). All corporate tax filings and payments must be made electronically through SAT's online portal, and companies are required to maintain detailed accounting records in Spanish and Mexican pesos.⁴

Corporate taxes in Mexico are paid in Mexican pesos (MXN). If your company's functional currency is not the peso, amounts must be converted using the exchange rate published by Banco de México on the last business day of the month. Companies must file their annual corporate income tax return by 31 March of the following year, with monthly provisional payments due by the 17th of each month.⁵

Provisional monthly payments are typically based on a company's cumulative income throughout the year, with final adjustments made in the annual tax return. Late tax payments are subject to interest and surcharges, with rates varying based on the specific circumstances and repayment period. Additionally, businesses may face other fines for non-compliance with tax obligations.⁶

The Mexican tax system requires companies to follow digital invoicing standards for all transactions, known as CFDIs, and failure to meet these digital requirements can result in significant penalties. Tax authorities may also prioritize auditing specific economic sectors to ensure compliance.⁶

Let's say your company has a turnover of 30 million Mexican pesos and operates with a profit margin of 10%, giving it a taxable profit of 3 million pesos.

At Mexico's standard corporation tax rate of 30%, the tax owed would be:

3,000,000 MXN × 30% = 900,000 MXN

When expanding your business to Mexico, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Mexico

The steps that can help your company stay compliant with Mexican tax regulations:

• Register for taxes early: After incorporating your company, you must register with the Mexican Tax Administration Service (SAT). This allows you to operate legally and fulfill obligations such as Corporate Income Tax (ISR), Value Added Tax (VAT), and employee-related contributions.⁷
• Understand filing deadlines: Corporate tax returns are generally filed annually by March 31 of the following year.⁸ Companies may also have to submit monthly advance payments throughout the year. Late filing or payment can result in significant fines, surcharges, and interest charges.
• Keep digital records: Mexico has one of the most advanced electronic tax systems. Companies are required to issue electronic invoices (CFDI) for all transactions and maintain accurate digital accounting records.
• Seek expert guidance: Penalties for errors or delays can be costly, so many businesses rely on corporate tax solutions or local specialists to handle filings, audits, and compliance. This reduces the risk of mistakes and ensures your company meets its obligations.

By following these steps and staying proactive, companies can maintain good standing with Mexican tax authorities and avoid unnecessary penalties.

International Expansion to Mexico

Knowing how corporate tax works in Mexico can help businesses plan better, save costs, and grow smoothly. The country is the 12th largest economy globally, with a GDP of $1.8 trillion. Its strategic location makes it an attractive hub for trade.¹⁰ Mexico shares a 2,000-mile border with the United States,⁹ giving direct access to the world’s largest consumer market. It also has ports on the Pacific Ocean and the Gulf of Mexico, providing sea access to Asia and Europe.⁹

Investors benefit from Mexico’s extensive network of trade agreements. The country has 14 Free Trade Agreements with 50 nations, giving access to 1.3 billion consumers. Mexico is also part of the United States-Mexico-Canada Agreement (USMCA), which eliminates most tariffs on goods between these three economies.¹¹ Around 70% of Mexican exports go to the U.S., making it a reliable base for manufacturers and exporters.¹²

Domestic demand adds to the appeal. Mexico’s population of 130.7 million includes a young workforce with an average age of 29. Education levels have improved, and the country is a top OECD member for science, technology, engineering, and mathematics graduates.¹³ Combined with relatively low labor costs in the U.S., Mexico provides a cost-effective workforce.

Infrastructure is another strength of this country. According to Inegi,¹⁴ its transport network includes 184 ports, 158 airports, 51 railway stations, and over 175,000 km of highways managed by federal, state, and municipal authorities. These logistics make moving goods across borders and within the country easier.

Companies expanding to Mexico should also plan to comply with the Mexican corporate tax rate and regulations. Working with a corporate tax attorney or specialist can ensure an easy entry into the market. Some businesses also invest in corporate tax training for local teams to avoid the risks of corporate tax avoidance and manage corporate tax extensions correctly.

You can start a business in Mexico by following these steps:¹⁵

1. Spot a business opportunity through market research.
2. Create a detailed business plan.
3. Select your entity type, business name, and location.
4. Submit a request to the Ministry of Foreign Affairs (SRE).
5. Register for tax with the Mexican Tax Authorities (SAT).
6. Register your business with the National Business Information Registry (SIEM).
7. Complete registration with the Foreign Investment Registry.
8. Open acorporate bank account.

Mexico stands out as a promising hub for business growth, backed by its solid economic indicators. Companies can benefit from its large market, global trade links, and cost advantages when expanding internationally.

Read more about the corporate tax in Nevada

Incorporation of Business in Mexico

To incorporate a business in Mexico, you’ll need to complete the following steps:¹⁶

• Request and reserve a company name with the Ministry of Economy.
• Choose a business structure that fits your goals and operations.
• Incorporate the company before a notary public by preparing the required documents:

Valid official identification
CURP (an 18-character alphanumeric code that uniquely identifies individuals)
Proof of tax status
Proof of address
Proof of payment of fees
Articles of incorporation (a legal document drafted before a notary public that establishes the company and its internal rules)

• Submit the documents to the Public Commercial Registry (RPC).
• Obtain additional licenses and permits as required for the nature of your business.

Business Entities in Mexico

The General Law of Commercial Companies (Corporations Law) regulates the formation of entities in Mexico. Two of the most common structures are:¹⁷

• Stock Corporation (Sociedad Anónima or S.A.): This entity exists under a corporate name and comprises shareholders whose liability is limited to the value of their shares. At least two shareholders are needed, but no minimum capital requirement exists. Securities represent shares, and the corporation is managed by either a sole administrator or a board of directors. A statutory auditor must also be appointed to oversee corporate governance.
• Limited Liability Company (Sociedad de Responsabilidad Limitada or S. de R.L.): This entity is formed between partners whose liability is limited to their contributions. It requires at least two partners and allows a maximum of fifty. There is no minimum capital requirement, but contributions must be multiples of one peso. Management is handled by a sole manager or a board of managers that the partners appoint. Unlike corporations, there is no requirement for statutory auditors, though companies may set up a supervisory board.

Mexico provides a favorable setting for international expansion. Companies should build a solid corporate tax strategy, work with corporate tax planners, and file corporate tax returns online to stay compliant and cut costs.

International corporate tax best practices

Managing corporate tax obligations across multiple jurisdictions requires a strategic approach that balances compliance with efficiency. Companies expanding internationally should prioritise understanding local tax laws while implementing systems that streamline their global tax management.

Stay compliant with local and international tax laws by ensuring proper registration in every country where your business operates. File all required tax returns on time to avoid penalties, and maintain up-to-date knowledge of local tax regulations. This includes understanding Mexico's specific requirements for electronic invoicing, monthly provisional payments, and detailed record-keeping in Spanish.

Companies should also understand and adhere to global standards set by organisations like the Organisation for Economic Co-operation and Development (OECD). With frameworks like Base Erosion and Profit Shifting (BEPS) and Pillar Two Global Minimum Tax, companies can ensure transparency, prevent tax avoidance, and avoid legal risks. Mexico has committed to implementing these international standards, making compliance essential for multinational operations.

Leverage double taxation treaties (DTTs) to avoid being taxed on the same income twice. Mexico has comprehensive tax treaties with over 60 countries, including major trading partners like the United States, Canada, and various European nations. These agreements can significantly reduce withholding tax rates on dividends, interest, and royalties, making international operations more tax-efficient.

Maintain up-to-date and transparent financial records in the required format and language. In Mexico, this means keeping accounting records in Spanish and Mexican pesos, with all transactions properly documented through the electronic invoicing system (CFDI). Clear financial records not only ensure compliance but also simplify the audit process and help identify opportunities for tax optimisation.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Mexico efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Mexico

Who is liable for corporate tax in Mexico?

All companies incorporated in Mexico or with their place of effective management in Mexico are considered tax residents and liable for corporate income tax on their worldwide income at a rate of 30%. Non-resident companies are only liable for Mexican corporate tax on Mexican-source income, typically through withholding taxes. This includes foreign companies with permanent establishments in Mexico, which are taxed on income attributable to their Mexican operations.

Are there any tax incentives for businesses in Mexico?

Mexico offers several tax incentives to promote investment and economic development. The most significant is the immediate deduction (depreciación acelerada) for certain assets, allowing companies to deduct 100% of qualifying investments in the year of purchase. Additionally, companies operating in designated economic zones or engaging in research and development activities may qualify for reduced tax rates or additional deductions. The maquiladora program also provides special tax treatment for manufacturing operations that export their products.

What is the tax treatment of dividends in Mexico?

Dividends distributed by Mexican companies to residents are generally not subject to additional corporate income tax, as they are paid from after-tax profits. However, dividends paid to non-resident shareholders are subject to a 10% withholding tax, which may be reduced under applicable tax treaties. For individual Mexican residents, dividends exceeding 200,000 pesos annually are subject to personal income tax at progressive rates up to 35%.

What is the process for registering for corporate tax in Mexico?

Companies must register with the Mexican Tax Administration Service (SAT) to obtain a tax identification number (RFC) before commencing operations. This process requires submitting incorporation documents, proof of address, and identification of legal representatives. Once registered, companies must also register for electronic invoicing (CFDI) and set up their digital tax certificate (FIEL) for online tax filings. The entire registration process typically takes 2-4 weeks and must be completed before the company can legally operate in Mexico.

What are the common pitfalls to avoid regarding corporate tax in Mexico?

The most common pitfalls include failing to comply with electronic invoicing requirements, missing monthly provisional payment deadlines, and inadequate record-keeping in Spanish. Many foreign companies also underestimate the complexity of transfer pricing rules, which require detailed documentation for transactions with related parties. Additionally, companies often fail to properly calculate and remit withholding taxes on payments to non-residents, leading to penalties and interest charges. Ensuring proper tax registration and maintaining compliance with all digital requirements from the start of operations is crucial for avoiding costly mistakes.

Sources used in this article:

1. PwC Tax Summaries: Mexico Corporate Income Taxes
2. Tax Foundation: Corporate Tax Rates by Country 2024
3. PwC Tax Summaries: Mexico Withholding Taxes
4. Microsoft: Electronic Accounting Regulations in Mexico
5. PwC Tax Summaries: Mexico Tax Administration
6. Alvarez & Marsal: Economic Package 2025 Updates
7. FlatFeeCorp: Business Tax Compliance in Mexico
8. Ogletree Deakins: Annual Tax Reports in Mexico
9. Novalink: The Allure of Investing in Mexico
10. World Bank: Mexico GDP
11. Olabranding: Mexico's International Trade
12. U.S. Trade.gov: Mexico Agriculture
13. ICEF Monitor: International Student Recruitment in Mexico
14. ALOW: Mexico's Logistics and Highways
15. Aadmi: Guide to Starting a Business in Mexico
16. Ventanilla MIPYMES: How to Create a Company
17. CLG Law Group: Doing Business in Mexico (PDF)

Sources last checked 15/09/2025