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Mexico corporate income tax: 30 percent on taxable profit, monthly advance payments, deduction rules and the dividend account

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Last verified: 2026-10-26 · Status: Changing

A company resident in Mexico, or a foreign company with a permanent establishment there, pays income tax at a flat 30 percent of taxable profit (income less authorized deductions and employee profit sharing paid, less prior losses). Tax is paid through monthly advance payments by the 17th of the following month and settled in an annual return due within three months of year end; deductions depend on electronic invoices, bank payment above MXN 2,000 and the strict business need test. After tax profits enter the net tax profit account (CUFIN), which lets dividends leave without a second layer of corporate tax; small companies owned only by individuals may use a simplified cash basis regime up to MXN 35 million of income.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

Corporate income tax rate	30 %LISR art. 9, as of 2026-10-26 · in force
Corporate tax residence test	Principal administration or place of effective management in Mexico CFF art. 9o., section II, as of 2026-10-26 · in force
Corporate annual return due	Within three months after year end (31 March for calendar year companies) LISR art. 9, as of 2026-10-26 · in force
Corporate advance tax payments	Monthly, by the 17th of the following month LISR art. 14, as of 2026-10-26 · in force
Payments above this amount must be electronic to be deductible	2000 MXNLISR art. 27, section III, as of 2026-10-26 · in force
Maximum deductible investment in a passenger car (combustion)	175000 MXNLISR art. 36, section II, as of 2026-10-26 · in force
Maximum depreciation rate, buildings	5 %LISR art. 34, section I, as of 2026-10-26 · in force
Maximum depreciation rate, computers and servers	30 %LISR art. 34, section VII, as of 2026-10-26 · in force
Gross up factor for corporate tax on dividends paid outside the net tax profit account	1.4286 factorLISR art. 10, as of 2026-10-26 · in force
Income ceiling for the simplified regime for companies owned only by individuals	35000000 MXNLISR art. 206, as of 2026-10-26 · in force

The rule

1. Who is taxed in Mexico on worldwide income. A company is resident in Mexico for tax purposes when it has established its principal administration or its place of effective management in Mexico. Residents pay Mexican income tax on income from all sources, wherever located. A company incorporated abroad but managed from Mexico can therefore be a Mexican tax resident.
Cost to do it: No fee. The cost is exposure: a foreign holding company effectively run by managers in Mexico may be taxed in Mexico on all its income.
Example: A Delaware company whose board meets and decides in Monterrey and has no real management abroad risks being treated as resident in Mexico and taxed at 30 percent on its worldwide profit. / On a worldwide profit of USD 1,000,000, Mexican tax at 30 percent would be USD 300,000 before foreign tax credits.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 9o., section II, 1981-12-31 official text · verified 2026-10-26

2. When a foreign company has a taxable presence (permanent establishment). Any place of business in Mexico where business activities are carried on, wholly or partly, is a permanent establishment, including branches, agencies, offices, factories, workshops, installations, mines and quarries. A foreign company also has a permanent establishment when a person other than an independent agent habitually concludes contracts in its name, or habitually plays the principal role leading to contracts that the foreign company concludes, for the sale of its property, the grant of the use of its property or the provision of its services (rule in force since the reform of DOF 9 December 2019). A place used only for preparatory or auxiliary activities, such as storing or displaying goods, purchasing goods or gathering information, is not a permanent establishment. Profits attributable to a permanent establishment are taxed at the same 30 percent rate as a Mexican company.
Cost to do it: No fee. Registering a permanent establishment means RFC registration, monthly returns and Mexican bookkeeping, normally through a local accountant.
Example: A foreign software vendor whose Mexico City sales manager negotiates and routinely signs customer contracts in the vendor's name has a permanent establishment; profit attributable to those sales of, say, MXN 4,000,000 bears MXN 1,200,000 of tax. / Attributable profit of about USD 216,186 and tax of about USD 64,856 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 2 and 3, 2013-12-11 official text · verified 2026-10-26

3. Rate, base, annual return and monthly advance payments. Companies apply 30 percent to their taxable result: total taxable income, less authorized deductions and the employee profit share (PTU) paid in the year, less tax losses from prior years. The annual return is due within the three months following the end of the tax year (31 March for calendar year companies). During the year the company pays monthly advance payments by the 17th day of the following month, computed by applying the profit ratio of its last twelve month return (taxable profit divided by nominal income) to cumulative income for the year, less PTU paid and losses; in its second year a company files its first advance payment covering the first three months using the first year ratio.
Cost to do it: 30 percent of the taxable result. No filing fee; monthly returns are filed online with the SAT using the company's electronic signature (e.firma).
Example: A company with a profit ratio of 0.08 from its last annual return and cumulative income to June of MXN 50,000,000 has an advance payment base of MXN 4,000,000 and a cumulative advance tax of MXN 1,200,000, less advance payments already made for January to May. / Income of about USD 2,702,323; cumulative advance tax of about USD 64,856 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 9 and 14, 2013-12-11 official text · verified 2026-10-26

4. What makes an expense deductible. Expenses must be strictly indispensable for the business, be backed by an electronic invoice (CFDI), and, when a payment exceeds MXN 2,000, be paid by electronic transfer from an account in the taxpayer's name, nominative cheque, credit, debit or service card or SAT authorized electronic wallet; fuel must always be paid that way. Employee benefits that are tax exempt for the worker are deductible only up to 53 percent of their amount, or 47 percent if the company reduced such exempt benefits compared with the prior year.
Cost to do it: The cost of a lost deduction is 30 percent of the expense; in practice the controls are invoice validation and paying suppliers by bank transfer.
Example: A company pays a supplier MXN 50,000 in cash for maintenance. The expense is not deductible because it exceeds MXN 2,000 and was not paid by an authorized electronic means, costing MXN 15,000 of extra tax. / Payment of about USD 2,702; lost tax deduction worth about USD 811 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 27, sections I and III; art. 28, section XXX, 2013-12-11 official text · verified 2026-10-26

5. Depreciation rates for common fixed assets. Maximum annual straight line rates include 5 percent for buildings and other constructions, 10 percent for office furniture and equipment, 25 percent for cars, buses, trucks, tractor trucks, forklifts and trailers, 30 percent for desktop and laptop computers, servers, printers and network equipment, and 35 percent for dies, molds and tooling. Investment in a passenger car is deductible only up to MXN 175,000 (MXN 250,000 for battery electric or hybrid electric and hydrogen cars). Under the Plan México decree, qualifying new fixed assets acquired up to 30 September 2030 can instead be deducted immediately at fixed percentages (see the tax incentives page).
Cost to do it: No fee. Depreciation spreads the tax saving over the asset's life; the car cap permanently disallows any excess.
Example: A company buys servers for MXN 1,000,000. It may deduct up to 30 percent a year, MXN 300,000, saving MXN 90,000 of tax each year. A car bought for MXN 600,000 is depreciable only on MXN 175,000. / Servers of about USD 54,046, annual deduction of about USD 16,214; the car cap is about USD 9,458 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 34 and 36, section II, 2013-12-11 official text · verified 2026-10-26

6. The CUFIN account and tax on dividends paid from untaxed profits. Each company keeps a net tax profit account (CUFIN), increased by each year's net tax profit (taxable result less income tax paid and non deductible items) and by dividends received from other Mexican companies, and decreased by dividends paid out of it; the balance is restated for inflation. Dividends paid from CUFIN bear no further corporate tax. Dividends paid in excess of CUFIN trigger corporate tax at 30 percent on the dividend multiplied by 1.4286, payable by the 17th of the following month; that tax can be credited against the company's income tax for the year and the next two years. Separately, the company withholds 10 percent on dividends paid to individuals and foreign residents.
Cost to do it: Zero if paid from CUFIN; otherwise 30 percent of 1.4286 times the dividend, about 42.86 percent of the dividend, payable upfront and creditable later.
Example: A company with a CUFIN balance of MXN 2,000,000 pays a dividend of MXN 3,000,000. The MXN 1,000,000 excess bears corporate tax of MXN 428,580 (1,000,000 x 1.4286 x 30 percent), due by the 17th of the following month. / Excess dividend of about USD 54,046; upfront corporate tax of about USD 23,163 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Arts. 10 and 77, 2013-12-11 official text · verified 2026-10-26

7. Credit for foreign income tax. Mexican residents may credit income tax paid abroad on foreign source income against their Mexican tax on that income, provided the foreign tax is included in taxable income. A Mexican company receiving dividends from a foreign subsidiary may also credit the proportional foreign corporate tax paid by that subsidiary on the distributed profits, grossing up the dividend accordingly.
Cost to do it: No fee; requires documentation of the foreign tax paid.
Example: A Mexican company earns MXN 1,000,000 of fees abroad on which MXN 100,000 of foreign tax was withheld. It includes MXN 1,000,000 in income, computes Mexican tax of MXN 300,000 on it and credits MXN 100,000, paying MXN 200,000. / Fees of about USD 54,046; foreign tax of about USD 5,405; net Mexican tax of about USD 10,809 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 5, 2013-12-11 official text · verified 2026-10-26

8. Simplified trust regime (RESICO) for small companies owned only by individuals. Mexican resident companies formed exclusively by individuals, with total income in the prior year of up to MXN 35 million (or expecting that amount when starting), must use the simplified regime of Title VII, chapter XII, which taxes on a cash basis. The regime is lost from the following year once income exceeds MXN 35 million. It is not available where a shareholder controls other companies or is a related party, to businesses run through a trust or joint venture (asociación en participación), or to companies in special regimes. A company with a corporate shareholder, such as a foreign parent, cannot use it.
Cost to do it: Same 30 percent rate; the benefit is cash basis timing and simpler compliance.
Example: Two Mexican individuals own a consulting company with income of MXN 20,000,000. It is taxed under the cash basis regime; once a year's income passes MXN 35,000,000 it moves to the general regime the following year. / Income of about USD 1,080,929; the threshold is about USD 1,891,626 at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 206, 2013-12-11 official text · verified 2026-10-26

Asset	Rate
Buildings and other constructions	5 percent
Office furniture and equipment	10 percent
Cars, buses, trucks, tractor trucks, forklifts and trailers	25 percent
Desktop and laptop computers, servers, printers, network equipment	30 percent
Dies, molds, matrices and tooling	35 percent
Vessels	6 percent

Selected maximum annual depreciation rates, LISR art. 34, verified 26 October 2026

Worked example

A US parent sets up a Mexican S.A. de C.V. that earns taxable income of MXN 80,000,000 in 2026 (about USD 4.32 million) and has deductible costs of MXN 70,000,000, all invoiced with CFDI and paid by bank transfer.
Its taxable profit is MXN 10,000,000 (about USD 540,465) and its tax at 30 percent is MXN 3,000,000 (about USD 162,139), paid through monthly advance payments by the 17th of each month and settled in the annual return by 31 March 2027.
Net tax profit of about MXN 7,000,000 is added to CUFIN, so a dividend of that amount in 2027 carries no corporate level dividend tax, only the 10 percent withholding (before treaty relief) covered on the withholding taxes page.

Step by step

1. Decide whether the business acts in Mexico through a subsidiary or will create a permanent establishment of the foreign company (LISR arts. 2 and 3); both pay 30 percent.
2. Register in the RFC, obtain the e.firma and set up electronic invoicing (CFDI) before the first sale.
3. Pay suppliers above MXN 2,000 only by bank transfer, card or nominative cheque and keep the CFDI for every expense.
4. File monthly advance payments by the 17th using the profit ratio from the last annual return, and the annual return by 31 March.
5. Track CUFIN every year so that dividends are paid only from taxed profits.
6. Before buying major equipment, compare normal depreciation with the Plan México immediate deduction (tax incentives page).

Common traps

Managing a foreign holding company from Mexico. Effective management in Mexico makes it a Mexican resident taxed on worldwide income (CFF art. 9o.).
Local staff signing contracts for a foreign company. A dependent agent who habitually concludes contracts creates a permanent establishment (LISR art. 2).
Paying cash. Any payment above MXN 2,000 not made by electronic means or nominative cheque is not deductible (LISR art. 27, section III).
Cutting tax exempt employee benefits. Doing so reduces the deductible share of exempt benefits from 53 to 47 percent (LISR art. 28, section XXX).
Distributing more than CUFIN. The excess bears about 42.86 percent corporate tax upfront (LISR art. 10).
Planning 2027 on current law. A bill amending the income tax law for 2027 was pending in the Senate when this page was verified; check the DOF before relying on deduction rules for 2027.

Sources

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