One of the main concerns of Spanish investors in Mexico is to understand the Mexican tax system. This is imperative in order to estimate the tax burden of their operations in Mexico, as well as to be able to carry out tax planning within the country's regulatory framework.
Comparative terminology
Below is a table comparing the main terms used in the Mexican and Spanish tax systems:
| Aspect | Mexico | Spain |
| Tax Authority | SAT (Tax Administration Service). | AEAT (State Tax Administration Agency). |
| Income tax | ISR (Income Tax). | IRPF (Personal Income Tax) and Corporate Tax for companies. |
| Value added tax | VAT (Value Added Tax). | VAT (Value Added Tax). |
| Special taxes | IEPS (Special Tax on Production and Services). | Special taxes on hydrocarbons, tobacco, alcohol and electricity. |
| Withholdings | ISR withheld from salaries, fees and payments abroad. | Income tax withholdings on salaries, rent and payments to non-residents. |
| Statements | Monthly or annually, depending on the tax. | Quarterly or annually, depending on the tax. |
| Tax incentives | For specific sectors such as exports, technology and AGAPES. | Focused on R&D, sustainability and SMEs. |
| Property Tax | Yes, managed by municipalities. | IBI (Property Tax). |
| Local taxes | Payroll Tax (ISN) and Property Tax. | IAE (Tax on Economic Activities), IBI. |
| Electronic invoice | CFDI (Digital Tax Receipt via the Internet). | Electronic invoice (mandatory in certain cases). |
| Supervision | Strict supervision through the SAT, with mandatory use of e.signature and CFDI. | Less electronic supervision; emphasis on regularization. |
| Double taxation | Agreement to avoid it with Spain and other countries. | Agreement to avoid it with Mexico and regulations of the European Union. |
| Tax on foreign companies | Specific rates and withholdings for payments abroad. | Application of the Non-Resident Income Tax (IRNR). |
| General rates | ISR: 30% (companies); VAT: 16%; IEPS: variable. | Corporate tax: 25%; VAT: 21%; Excise taxes: variable. |
Key differences:
- Supervision: Mexico has a more advanced electronic system (CFDI and electronic audits), while Spain relies more on traditional processes.
- VAT: Spain applies reduced rates (10% and 4%), while Mexico uses a general rate with fewer exceptions.
- Local taxes: Spain has more specific local taxes (IAE, IBI), while in Mexico they are more general (ISN and Predial).
Detailed comparative analysis
Below we present a comparative analysis of rates, treaties, benefits, among others, of the tax systems of Mexico and Spain:
| Aspect | Mexico | Spain |
| General Corporate Tax | ISR: 30% on profits. | Corporate Tax: 25% on profits. |
| Reduced Rates | Simplified Trust Regime for income < $35 million pesos per year. | 15%-20% for startups in the early years. |
| Taxable Base | Accumulated income less authorized deductions. | Income less authorized deductible expenses. |
| Value Added Tax (VAT) | General: 16%. Exempt on food, medicine, and exports. | General: 21%. Reduced: 10% and 4% for certain essential goods and services. |
| Main Deductions | Essential expenses, depreciation of assets, investments. | Necessary expenses, amortization of assets, financial costs. |
| Provisional Payments | Monthly, calculated on the accumulated taxable base of the year. | Quarterly, based on the total tax amount of the previous year. |
| Withholdings | Mandatory for salaries, fees and payments to foreign residents. | Mandatory for salaries, rents and payments to non-residents. |
| Tax Incentives | Promotion of R&D, tax incentives for agricultural and export sectors. | Benefits for research, technological innovation and cultural activities. |
| Local Taxes | Payroll Tax (2%-3%, depending on the state) and Property Tax. | IAE (Tax on Economic Activities), IBI (Property Tax). |
| International Conventions | Treaty with Spain to avoid double taxation and international OECD agreements. | Treaty with Mexico, aligned with guidelines of the European Union and OECD. |
| Electronic Supervision | SAT portal with mandatory use of CFDI and e.signature. | Electronic Headquarters of the AEAT with online declaration and payment systems. |
| Special Taxes | IEPS: Taxes alcohol, tobacco, gasoline and sugary foods. | Taxes on hydrocarbons, alcohol, tobacco and electricity. |
| Global Trends | Participation in OECD initiatives on global minimum rates. | Implementation of the 15% global minimum rate and regulation of large corporations. |
Conclusions
The tax system of Mexico and Spain share a structure based on direct and indirect taxes, but differ in their approach and scope. Mexico stands out for its strict and digitalized oversight through the use of CFDI and electronic audits, while Spain has a less centralized system, with a greater presence of local taxes such as IAE and IBI. In terms of corporate taxes, Mexico applies a flat rate of 30% on the ISR, while Spain has a rate of 25% with specific incentives for new companies and SMEs.
VAT in both countries reflects their economic priorities: Mexico applies a general rate of 16% with few exceptions, while Spain diversifies with reduced rates (10% and 4%) for essential goods. Both systems promote tax incentives, but Spain focuses on innovation and sustainability, while Mexico prioritizes agricultural and export sectors. These differences reflect the adaptation of each system to its economic contexts and development priorities.
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