Our partner Santiago Llano and associate Fernando Caballero explore in this article the often-overlooked state taxes on notarised transactions in Mexico. While federal taxes like income tax and VAT are familiar, state-specific taxes can have significant financial implications for companies operating in Mexico.
The authors emphasize the importance for foreign entities to conduct a thorough analysis and consider state-specific tax regulations when planning transactions or restructurings in Mexico. They also highlight the need to assess whether the applicable state tax aligns with constitutional principles or if it can be challenged in court.
Other highlights include:
- State-Specific Regulation: Each state has its own set of tax regulations, making it essential for businesses to stay informed and compliant.
- Notarised Transactions: States such as Aguascalientes, Chihuahua, and Tabasco impose taxes on legal instruments like mergers and capital contributions.
- Constitutional Concerns: It's crucial to ensure these taxes align with constitutional principles to avoid legal challenges.
- Impact on Foreign Entities: Thorough due diligence is necessary to understand the full financial impact of these taxes.
"For foreign entities, understanding these state-specific taxes is crucial. Transactions that may seem free of additional taxes at the federal level could still incur significant costs at the state level."
We invite you to read the full article to learn more about this topic (only available in English).
If you have any questions, please contact our Tax experts (see details below).
