Headquartering your business in Mexico can be extremely advantageous, particularly for business owners who wish to lower their tax burden as much as possible. Several programs are available for people who either do business in Mexico or whose business is headquartered in Mexico, and if you take advantage of these programs, you may be able to decrease your taxes and potentially the costs of operating your business. Here are some programs that could benefit your Mexican business that every business owner should keep in mind.
The IMMEX program is one of the most beneficial programs for people who do business in Mexico, particularly manufacturers. If you have a manufacturing plant in Mexico, IMMEX allows you to import all the raw materials that you need duty- and tax-free if you meet certain conditions.
To qualify for this program, you have to agree to export all of your products out of Mexico within a time frame set by the government. If your company currently pays heavy taxes due to raw materials, shifting your manufacturing to Mexico and enrolling in the IMMEX program can be a good decision.
Mexican tax management with IMMEX is a lot easier with Southeast Computer Solutions. We designed the Mexican Fiscal Requirements Enhancement to help make reporting taxes quicker and easier for customers who are running Sage Enterprise Management. You'll be able to make reports for your VAT paid, VAT collected, and much more.
The PROSEC program can be a great option for lowering the amount of taxes you pay while doing business in Mexico. With PROSEC, you can benefit from lower duty rates on raw materials vital to your manufacturing process, whether you plan to sell your goods in Mexico or in some other country. To qualify for this program, you will need to import raw materials from companies that do not belong to the North American Free Trade Agreement.
Research and Development Tax Credits
Image via Flickr by UC Davis College of Engineering
You can also lower your company's taxes considerably if you're heavily involved with research and development. Under the Mexican income tax laws, you can get a tax credit of up to 30% for your R&D expenses. This tax credit even applies to investments that your company makes into R&D.
If you're interested in this tax credit, it's important to remember that you cannot combine the R&D tax credit with any other tax credits. Also, your expenses will need to be reviewed by a committee before your tax credit will be approved. Every February, you'll need to file a tax return that includes your R&D expenses for review.
Incentives Related to Employees
If your company is headquartered in Mexico, there are a number of employment incentives that can benefit your business. For instance, if you employ people with certain types of disabilities, it's possible to receive a credit that equals 100% of these employees' salaries.
In addition to this credit, it's possible to take a deduction for disabled employees that is equivalent to 25% of their salaries. Remember, however, that you cannot take advantage of both of these tax advantages in the same year.