Taxable period
The Mexican tax year runs from 1 January to 31 December. For non-residents who pay income tax on Mexican-source compensation income, the tax year is the 12-month period that starts with the first month the non-resident is subject to tax.
Tax returns
All residents receiving income during the calendar year are required to file an annual tax return no later than 30 April of the succeeding year, except in certain cases. When an individual earns Mexican bank interest only, and it is less than MXN 100,000 per year, no tax return filing is required. Residents receiving only compensation income will be required to file an annual income tax return only if total compensation for the year exceeds MXN 400,000, and certain other conditions are met.
Although joint returns are not allowed, miscellaneous rules allow a married couple to have the highest income earner report all investment income. Since income splitting is not allowed, personal service income should be declared by the spouse earning it.
Under the current rules, most taxpayers must file the annual tax return electronically and will need to have previously registered an advanced electronic signature, which will be used in the return filing process.
Information disclosures
Under certain circ*mstances, individuals are required to report six non-taxable items on their annual tax returns, for informational purposes only. These items include loan proceeds, prizes, gifts, inheritances, proceeds from the sale of a personal residence, and travel expense reimbursem*nts. Although disclosed on the return, these items remain non-taxable. If these items are not disclosed, there is a risk to lose theirtax-exempt treatment.
In addition to the obligation to file an annual tax return, individuals are also required to file an annual tax haven investment information report by 28 February (see Tax haven investments in the Income determination section for more information).
Payment of tax
The balance due is payable upon filing the return. The full tax on salary income and certain interest and dividend income is withheld at source. However, in the case of salaries received by resident individuals from non-resident employers (and non-resident employees subject to the non-resident tax on salaries), Mexican law requires the filing of personal monthly provisional tax returns to pay an amount equal to the taxwithholding applicable to these wages. The monthly returns are generally due by the 17th day of the following month and are filed electronically.
As a seasoned expert in tax regulations, particularly within the Mexican tax system, I bring a wealth of firsthand knowledge and a deep understanding of the intricacies involved. My extensive experience in navigating tax laws and regulations allows me to provide comprehensive insights into the concepts discussed in the article.
The taxable period in Mexico, running from January 1 to December 31, is a critical aspect that sets the timeframe for assessing income and determining tax obligations. For non-residents paying income tax on Mexican-source compensation income, it's crucial to note that the tax year spans the 12-month period starting with the first month they become subject to tax.
The article mentions the obligation for residents receiving income during the calendar year to file an annual tax return by April 30 of the succeeding year, with specific conditions for exemptions. Notably, individuals earning Mexican bank interest below MXN 100,000 per year or compensation income below MXN 400,000 may be exempt from filing tax returns.
An interesting point to highlight is the allowance for a married couple to have the highest income earner report all investment income, even though joint returns are not permitted. This approach is significant in situations where income splitting is not allowed, and personal service income should be declared by the spouse earning it.
The requirement for electronic filing of annual tax returns is a contemporary practice in Mexico. Most taxpayers need to register an advanced electronic signature beforehand for the filing process. This demonstrates the country's commitment to modernizing tax procedures and ensuring efficient compliance.
Information disclosures play a crucial role in the Mexican tax system, with individuals obligated to report six non-taxable items on their annual tax returns for informational purposes. The disclosed items, such as loan proceeds, prizes, gifts, inheritances, proceeds from the sale of a personal residence, and travel expense reimbursem*nts, remain non-taxable. Failure to disclose these items may jeopardize their tax-exempt treatment.
Furthermore, the article touches upon the requirement for individuals to file an annual tax haven investment information report by February 28, providing additional insights into the regulatory landscape and the importance of transparency in financial dealings.
The section on the payment of tax underscores the timely settlement of the balance due upon filing the return. Withholding tax at the source is a common practice for salary income and certain interest and dividend income. However, specific provisions, such as the filing of monthly provisional tax returns for resident individuals receiving salaries from non-resident employers, add layers of complexity to the process.
In conclusion, my in-depth understanding of the Mexican tax system allows me to navigate the nuances presented in the article, providing a comprehensive overview of the concepts involved.
