• Transaction with a related foreign party must be on an arms-length basis.There are specific Transfers Pricing rules for maquiladora operations.
  • The tax implication of the maquiladora’s activities will be impacted by international treaties on the avoidance of residence of the foreign parent company. For purposes of this material, it was assumed that the parent company is in the United States and has therefore referred to the Mexico USA income Tax Treaty. The tax implication may be somewhat different if the parent company is located in another country. Although the areas of concern will generally be the same.
  • The activities of the foreign parent company in Mexico through the Mexican subsidiary could be subject to permanent establishment exposure.

Taxes and Contributions

Relevant Aspects of Mexican Taxation

  • Principal taxes in Mexico are Federal Income, Value Added and Asset Tax
  • Corporations are subject to a Federal Income Tax at a flat rate of 30%(2012), 29% (2013), and 28% for 2014; applied on the amount of taxable income (Deloitte)
  • Baja California has a payroll tax of 2% on payrolls
  • Neither the State of Baja California nor the city of Tijuana has income tax.