Key tax measures implemented in Mexico due to COVID-19
To ensure our clients currently doing business in Mexico or considering expanding to Mexico have broad knowledge of the Mexican government’s responses to COVID-19, we have put together a summary of key tax incentives and economic measures currently implemented, so you can identify any opportunities to help manage cash flow during these unprecedented times.
Federal measures
Suspension of activities
The Tax Administration Service has announced the suspension of deadlines from May 4 to 29, 2020, due to COVID-19. This measure applies to all procedures that cannot be handled electronically, including administrative appeals, ongoing tax audits and permits.
This suspension does not apply to the filing of tax returns, notices and reports, payment of taxes, levies and proceeds, tax refunds, administrative law enforcement actions, customs procedures, and assistance to taxpayers.
Corporate Income Tax (CIT)
No reductions, extensions or deferrals have been granted.
Value Added Tax (VAT)
There will be no deferrals, reductions or reliefs. However, accelerated VAT refunds and trade and customs facilitations are in place.
Employer’s payments for Social Security
Employers may defer some Social Security payments for up to 48 months, under prior agreement with the Mexican Institute of Social Security (IMSS), and upon a 20% upfront payment for the employer quota and 100% of the worker quota. No posting of a bond or other kind of guarantee is needed.
The monthly interest rate ranges between 1.26% and 1.82%.
The National Workers Housing Fund Institute (INFONAVIT) will give small- and medium-sized enterprises (up to 250 employees) an extension for the housing contributions corresponding to the second and third bimesters (i.e., period of two months) until September 2020.
State tax
Local incentives for state taxes such as relief or deadline extensions may be available in certain states. The range of measures includes extensions to file and pay taxes and waivers on certain state taxes such as wage tax, property tax, vehicle registration, hotel tax, etc.
Financial support
The Bank of Mexico has implemented measures to strengthen the credit channels and provide liquidity to financial markets by lowering the interbank interest rate to 6%.
The Office of Treasury and Public Credit has announced jointly with the National Insurance and Bonding Commission the possibility for insurance entities to extend deadlines for payment of insurance premiums for up to 60 days.
Temporary support from banks for natural and legal persons will continue for the duration of the COVID-19 emergency.
Personal tax
The deadline for the submission of individual tax returns for FY2019 is extended until June 30. 2020.
Expand section below to view state measures.
Aguascalientes
Payroll tax for April, May and June can be spread over eight monthly installments. A 30% reduction of payroll tax is in place for employers with at least 20 hired employees from April to December 2020.
Baja California Sur
Payroll tax for March, April and May 2020 deferred to August, October and December 2020, respectively.
Coahuila
5% reduction in property tax until June 30, 2020.
30% reduction in tax on commercial activities and transit and transport tax.
Colima
Payment of payroll and lodging taxes deferred until April 30, 2020.
Durango
50% reduction in payroll tax; payments can be deferred up to six months with a payment plan agreement.
Guanajuato
Payment of March and April payroll tax (3% on nominal payroll) can be covered in up to six monthly installments
Hidalgo
50% reduction in payroll tax for the months of March and April.
Mexico City
All state payments and submissions due in April 2020 are deferred to April 30, 2020.
Michoacán
100% subsidy of payroll tax during March, April and May for small businesses with at least 50 employees directly linked to the tourism sector.
Morelos
Payroll tax deferred until June 30, 2020.
Oaxaca
50% reduction in payroll tax to businesses for which income has decreased 50% or more during the second bimester of 2020.
100% tax relief of lodging tax to a later time to be determined.
Quintana Roo
Payroll and lodging tax of March, April and May 2020 deferred to October, November and December 2020.
20% subsidy to taxpayers that file tax returns on time.
Sonora
50% reduction in payroll tax to businesses with less than 50 employees.
100% relief of lodging tax to a later time to be determined.
State of Mexico
50% reduction in payroll tax; payments can be deferred up to six months with a payment plan agreement.
Yucatán
50% stimulus of payroll tax generated during March and April. The remaining 50% must be paid no later than December 10, 2020.
100% reduction in lodging tax during March, April and May.
100% reduction in schedular tax on commercial activities during March and April.
Zacatecas
100% reduction in payroll tax generated during March and April for businesses with fewer than 20 employees.
50% reduction in payroll tax generated during March and April for businesses with 21 to 40 employees.
30% relief of payroll tax generated during March and April for businesses with over 40 employees.
100% reduction in lodging tax during April and May.
To learn how Baker Tilly can help you find the best ways to manage your business in Mexico, such as maximizing cash flow and managing credit risk, please contact us.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
