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| *Ostroff, Fair and Company>>>Mexico Taxes |
Are cross-charges from a Mexican company to its non-resident parent subject to Mexican VAT? |
The cross-charges in the foregoing question represent a reimbursement of salaries and travel expenses of specific employees of the Mexican company who are engaged in activities directly beneficial to the non-resident parent company. Mexico. Responding to the needs raised by a specific sector of the telecommunications industry, a decree has been published modifying the Mexican VAT Law to include, within the list of services that qualify for the 0% VAT rate, assistance services rendered by call centers when certain requirements are met. Under Mexican VAT provisions, services are generally subject to VAT at the 15% tax rate. A reduced rate of 10% is allowed for services rendered by residents in the border zones, as defined. Services that are rendered to foreign residents are also subject to VAT unless the service qualifies for the 0% VAT rate available for the exportation of services. In this respect, however, only certain specific types of services qualify as an exported service, entitled to the reduced VAT rate. According to the newly incorporated provision, assistance services rendered by call centers would be considered as exported and therefore qualify for the 0% rate if: the service is contracted and paid for by a foreign resident with no permanent establishment in Mexico; and the call originates abroad. This new rule eliminates one of the costs associated with using Mexico as a service center. Source(s): http://www.ey.com/global/content.nsf/int... http://file5.com/search5/"mexican-vat... |
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