The types of taxes are the different kinds of tribute that people are obliged to pay to the State so that it, in turn, redistributes them equitably. Knowing what types of taxes are, when and why they are paid is important for the financial health of your company.
Every responsible entrepreneur knows well that it is essential to be up to date with their tax obligations, such as paying taxes. However, it is very important to know how they are classified in Mexico and what the types of taxes are.
There are different types of taxes and each one has a different framework of obligations. In Mexico there are three main categories that classify taxes according to the fiscal regime. Here we will explain each of them so that you understand them better.
As you become familiar with the types of taxes in the country, you will promote the growth of your company, you will properly manage income and expenses, and you will be able to prepare for your tax return.
What are taxes?
He defines taxes as a contribution (payment) in money or in kind, mandatorywith which both natural persons (you, your employees) and legal entities (a constituted organization or company) cooperate to strengthen the country’s economy and development.
These fees or taxes paid to the State may vary depending on the type of taxpayer you are, and are used to pay for public expenses, for example: services, public administration, security, transportation, education, public health, infrastructure, social programs, among others. others.
Taxes are paid by everyone, either as part of our income, our goods or in the purchase of services or products for daily life. As most of the public income comes from the payment of taxes, that is why they are so important for the country’s economy.
Complying with the payment of your company’s taxes in a timely manner is very important, as it will prevent you from having to face sanctions: companies that do not pay taxes can receive from fines to embargoes that put their financial health at risk. For this reason I recommend you to be on the lookout for planning the payment of taxes on an annual and monthly basis.
I invite you to read our article, where we clarify this and other doubts related to taxes.
How are taxes classified?
Now that you know what taxes are and what they are used for, let’s talk about their classification. Although there are various categories, the first classification recognizes two main types of taxes: direct and indirect.
direct taxes
They are those that directly tax the wealth of people or companies, this means that the obligation to pay falls directly on the person, company or company.
Indirect taxes
These refer to those that are established through the purchase of goods and services, therefore, they indirectly affect people’s wealth.
Apart from this classification, they can also be grouped as personal or subjective taxes (they take into account the personal or economic situation of the individual when assigning the amount) and real or objective (the personal or economic situation of the taxpayer is not taken into consideration).
What types of taxes exist in Mexico?
Taxes are grouped into three main categories that collect all types of taxes paid by Mexican taxpayers. These three levels of taxes are mandatory:
- Federal taxes
- State taxes
- Municipal taxes
1. Federal Taxes
It refers to the basic taxes with which the majority of Mexican taxpayers and foreigners who carry out an economic activity in national territory must comply.
Among the most important federal taxes are:
- Income Tax (ISR)
- Value Added Tax (VAT)
- Special Tax on Production and Services (IEPS)
- Tax on New Cars (ISAN)
- Flat Rate Business Tax (IETU)
- Tax on Cash Deposits (IDE)
2. State Taxes
As its name indicates, these change depending on the state in which we are located, and they do not move between one and the other. Each federal entity has its own tax regulations or Treasury Law that specifies what taxes are charged to its citizens.
Some examples of these taxes are possession, civil registration, notary and payroll tax.
3. Municipal Taxes
They are collected by local governments, they change according to each municipality and they do not originate a direct compensation to the taxpayer.
The following taxes stand out in this classification:
- Property tax
- Property Acquisition Tax
- Tax on Public Shows
- Wealth Tax
In addition to the aforementioned classifications, there are other more specific ways of classifying taxes in Mexico, for example: taxes for fiscal and non-fiscal purposes; general, specific and special taxes; fixed, proportional, progressive and regressive taxes; Taxes based on profit, wealth and consumption.
What types of taxes does a company pay in Mexico?
As I already mentioned, companies that generate income have tax obligations that must be met to avoid surcharges, penalties and fines. That is why it is of great importance that you know what type of taxes a company pays in Mexico.
Of the aforementioned taxes, the federal taxes that all companies must pay are:
1. Income Tax (ISR)
It is a general, personal and direct tax that taxes the income of individuals, companies, SMEs, and individuals with business activity, merchants or foreigners who obtain income from commercial or professional activities in our country.
It is paid for each fiscal year through the declaration: annually in April for individuals and in March for legal entities, of the following fiscal year. Provisional payments no later than the 17th day of the month following the month in which the tax corresponds. Here we tell you, in case you want to delve into the subject.
2. Value Added Tax (VAT)
This indirect tax is generated every time a good or service is purchased, that is, the one who absorbs the tax is the final consumer.
It is paid by all those who carry out the following activities: alienation of goods (sale or acquisition of products), leasing of goods, provision of independent services, importation of goods and services.
It is paid by declaration no later than the 17th day of the month following the one in which the tax corresponds. In addition to the VAT that the taxpayer must pay on his income, he also pays it when acquiring goods and services necessary for the development of his activity.
3. Special Tax on Production and Services (IEPS)
The persons subject to this tax, considered extra-fiscal, are natural and legal persons who market or import: alcoholic beverages and beer, alcohol, denatured alcohol and non-crystallizable honey; processed tobacco, gasoline and diesel, energy drinks, drinks with added sugars, fossil fuels, pesticides and foods with a high caloric content.
This tax has the peculiarity that it is indirect, that is, the taxpayer does not pay it, technically it is said that he ‘transfers’ it and the one who pays it is the final customer in the price of the product.
Pursuant to the obligation to report it to the SAT, the information for the quarter immediately prior to that of your return must be submitted quarterly, in the months of April, July, October and January, of the corresponding year.
It is done through the electronic program ‘Multiple Informative Declaration of the Special Tax on Production and Services’ (MULTI-IEPS). This declaration contains nine annexes that must be filled out according to the corresponding obligation according to the act or activity carried out.
What other taxes should you take into account in your company?
It is important that you keep in mind that taxpayers pay different types of taxes depending on the tax regimes in which they are. Here we describe in more detail other taxes that, although they are not mandatory for all natural or legal persons, could become so at a certain time.
Tax on New Cars (ISAN)
This is a federal tax that is levied on the sale of new cars or the importation of cars into the country. It is paid by all natural and legal persons who acquire a new car.
Flat Rate Business Tax (IETU)
Taxes the effective perception of income of natural and legal persons, for the operations of alienation of goods, provision of independent services and for the granting of the temporary use or enjoyment of goods.
Tax on Cash Deposits (IDE)
It applies to cash deposits, either for one or for the sum of several deposits whose amount in the month exceeds $15,000 MXN. Individuals and legal entities that exceed this amount in cash deposits (either in national or foreign currency), or that acquire cashier’s checks in cash, regardless of the amount, are obliged to pay it.
Tenure
It is a payment that all persons, natural or legal, must make to own a vehicle, such as a car and motorcycle. Payment is made during the first quarter of the year and is determined by the make and model of the vehicle.
Payroll Tax (ISN)
It is a state contribution that must be paid by natural and legal persons who make payments in cash or in kind for remuneration of subordinate personal work.
Property tax
It is a municipal tax that must be paid, annually or bimonthly, by natural or legal persons for the ownership of a property. It is calculated based on its cadastral valuation.
Property Acquisition Tax (ISAI)
It is generated when natural or legal persons buy any type of real estate. Varies depending on the state entity.
Wealth Tax (IP)
Taxes the property or possession of assets, falling on its net value, periodically. This tax is strictly individual and falls on natural persons.
In conclusion
Excellent! Starting today you can take with you the best guide to understand the types of taxes in Mexico, and use it with confidence to review the taxes that all companies must pay, including yours.
Remember that if there is no correct financial organization when calculating your company’s tax payment, you run the risk of losing not only your financial health but also your reputation, performance, productivity and service. Calculate your well taking into account this tax type guide!
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