Mexican Tax Law: Non-Residents

Lease of Real or Personal Property

Non-Residents: Income derived from the lease of real or personal property is taxed at a flat rate of 25% with no deductions, except for the lease of railroad cars, containers, airplanes, and ships for commercial transportation, which is taxed at 5%.

Capital Gains

Gains from the sale of shares or securities representing property located in Mexico, fixed assets, securities, or shares of Mexican companies are taxed at a flat rate of 20% of the gross proceeds of the sale. However, the non-resident may elect to pay tax at the rate of 25% on the net taxable gain realized, provided that the non-resident has a legal representative in Mexico who will calculate and pay the corresponding tax to the tax authorities. If the seller is a resident of a low-tax jurisdiction (tax haven), such seller can only apply the 25% rate.

Joint Liability of Withholder

Any company resident in Mexico or permanent establishment in Mexico must comply with the withholding and payment of taxes on behalf of third parties. If such taxes are not withheld and paid to the tax authorities, aside from imposing surcharges and penalties on the company, the latter is not authorized to deduct them as expenses for income tax purposes.

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