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.