In Mexico, individuals who carry out business activities or provide professional services must comply with tax obligations established in the Income Tax Law (ISR)Articles 100 to 110 of the law detail the specific provisions for this regime. In this article, we break down the most important points and the types of income that should be considered as taxable.
Who is Required to Pay Income Tax in this Regime?
According to the Article 100, natural persons who receive income from:
- Business Activities: They include commercial, industrial, agricultural, livestock, fishing and forestry activities.
- Provision of professional services: Remuneration for independent personal services that do not fall under the salary and wage system.
Foreign residents with permanent establishments in Mexico are also required to declare income attributable to their business or professional activities.
Types of Accumulative Income
The Article 101 It establishes various types of income that are considered to be cumulative under this regime. Below, we present the most notable ones:
- Forgiveness, cancellation or remission of debts.
- Alienation of accounts and documents receivable.
- Recovery of insurance, bonds or liabilities for losses of assets related to the activity.
- Income received for third party expenses if they are not supported by tax receipts.
- Sale of works of art prepared by the taxpayer.
- Commissions or income from financial agents.
- Exploitation of copyright: books, photographs, musical works, etc.
- Interest charged related to the activity.
- Returns, discounts and bonuses.
- Gains on sale of fixed assets used in business activities.
- Presumptively determined income by the tax authority.
Authorized Deductions
The Article 103 details the deductions that taxpayers can make to reduce their taxable base, among which the following stand out:
- Returns, discounts and bonuses granted.
- Acquisition of goods and raw materials.
- Essential expenses for the activity.
- Investments, interest paid and IMSS fees.
- Local taxes on business or professional income.
It is essential that these deductions are strictly indispensable to obtain income and have tax receipts.
Provisional Payments and Obligations
Taxpayers must make monthly provisional payments according to the Article 106, filing the declaration before the 17th of the following month. In addition, legal entities that pay professional services to individuals are required to retain the 10% of ISR.
Among the main obligations of the Article 110, highlight:
- Keep accounting records in accordance with the Federal Tax Code.
- Issue tax receipts for income received.
- Submit provisional and annual declarations.
Conclusion
Individuals with business or professional activities have a well-defined tax structure in the Income Tax Law. It is crucial to identify the types of income that can be accumulated, make the permitted deductions and comply with tax obligations in a timely manner. The correct application of these articles not only guarantees legal compliance, but also allows for efficient management of tax contributions.
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