Company Formation & Tax in Mexico
Latin America's second-largest economy and the manufacturing gateway to North America — a 30% federal corporate tax, 16% VAT and full foreign ownership under the USMCA umbrella.
Mexico pairs a flat 30% corporate income tax with a 16% value-added tax and, since the 2014 reform, a 10% withholding on dividends distributed to individuals and foreign shareholders. Its real draw is location: USMCA access to the United States and Canada, a deep manufacturing and nearshoring base, and full foreign ownership in most sectors. For founders and groups building North American supply chains, a Mexican subsidiary is often the anchor.
The headline numbers
| Tax | Rate |
|---|---|
| Corporate income tax (ISR) | 30% |
| VAT (IVA) standard | 16% |
| VAT northern border zone | 8% |
| Dividend withholding (individuals / foreign) | 10% |
| Capital gains (companies) | Taxed as ordinary income (30%) |
IVA applies to most goods and services at 16%, reduced to 8% in the northern border region and zero-rated on exports and certain basic goods. There is no separate capital gains regime for companies — gains fold into the 30% corporate base.
What shapes the effective burden
- Dividend layer — profits are taxed at 30% at company level; a further 10% is withheld when distributed to individuals or non-resident shareholders, so treaty planning matters.
- Profit-sharing (PTU) — 10% of pre-tax profits is distributed to employees annually, a real cost distinct from tax.
- IMMEX / maquiladora regime — manufacturers producing for export benefit from VAT and duty deferral on temporary imports, central to the nearshoring model.
- Transfer pricing — full OECD-aligned documentation is required for intercompany dealings, closely audited by SAT.
Forming the company
The two standard vehicles are the Sociedad Anónima de Capital Variable (S.A. de C.V.) and the Sociedad de Responsabilidad Limitada (S. de R.L. de C.V.); the latter is often preferred by US investors for its pass-through treatment under US check-the-box rules. Incorporation is executed before a notary public (fedatario), registered in the Public Registry of Commerce, and requires an RFC tax registration. At least two shareholders are usual (100% foreign ownership permitted in most sectors), with no fixed minimum capital. Monthly and annual filings, electronic invoicing (CFDI) and digital accounting through SAT are mandatory.
Frequently asked questions
What is Mexico's corporate tax rate in 2026?
A flat 30% federal corporate income tax (ISR), with capital gains taxed inside the same base.
How are dividends from a Mexican company taxed?
Profits are taxed at 30% at company level; a further 10% is withheld on dividends paid to individuals and foreign shareholders, subject to reduction under tax treaties.
What is the VAT rate in Mexico?
16% standard, reduced to 8% in the northern border zone, with exports and certain basic goods zero-rated.
Can a foreigner own a Mexican company fully?
Yes — 100% foreign ownership is permitted in most sectors, with limited exceptions reserved to the state or nationals under the Foreign Investment Law.
Official sources
- SAT — corporate income tax and VAT
- Secretaría de Economía — foreign investment and IMMEX
- National Registry of Foreign Investment (RNIE)
This guide is general information prepared by A.R.M. Management and is current as at July 2026. It is not legal or tax advice; incentive and regime eligibility carries conditions and rules change. Confirm against SAT, or with an advisor, before acting.
Structure a Mexican company the right way.
A.R.M. Management advises founders, investors and manufacturing groups on Mexican incorporation, IMMEX structuring and cross-border tax across North America. Begin with a confidential conversation.