Mexican Tax Law: Taxation of Foreigners

Mexico's tax treatment of income earned by foreigners is comparable to that of the US and other industrialized nations.

Mexico has negotiated international tax agreements with a number of its major trading partners, such as Canada and the US. These agreements have two basic objectives: (i) to ensure that each contracting state allows tax credits for income taxes paid to the other contracting state to avoid double taxation; and (ii) to reduce the taxes that each contracting state may impose on the nationals of the other (e.g. taxes on income from interest on loans, dividends, and royalties).

Mexico signed and ratified a bilateral income tax treaty with Canada in 1992. The treaty was titled: The Convention between the Government of Canada and the Government of Mexico for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.  It was signed April 18, 1991 and published in Mexico on July 17, 1992 and in Canada on May 28, 1992 (the Canada-Mexico Tax Treaty).

Mexico signed a similar treaty with the US later that same year: The Convention between the US Government and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. It was signed Sept. 18, 1992 and entered into effect January 1, 1994 (the US-Mexico Tax Treaty).

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