Income Tax Liabilities in Mexico

Expats’ tax liabilities for work performed online or over-the-phone in Mexico comes up over and over on forums across the web. The situation becomes even more interesting if they live here full-time, doing on-line work for a non-Mexican company, and receive their pay in foreign (non-Mexican) accounts. This ball was most recently kicked-around at length on a Mexconnect thread. “Tax Liabilities in Mexico”

At first glance there appears to be a conundrum between: Hacienda’s policy that worldwide income must be reported by expats whose principal place of activity is Mexico and INMs policy for (not?) giving visas to expats work online and live in Mexico, who do not work for Mexican employers and receive their pay outside of Mexico.

Here’s one more perspective on the issue: I spoke with a Merida INM supervisor today about these specific issues, and she made a phone call to her manager to check on her understandings. She then said that:
1. INM would issue this person a “No Inmigrante Visitante Otros – No Lucrativa” – “FM3″ – visa/permit.
2. No taxes are owed to Mexico.
3. The expat should not register with Hacienda.

She then gave me the following written instructions for an INM application for the “No Inmigrante Visitante Otros – No Lucrativa” visa/permit.
~ ~ ~ ~ Register your INM application online at the “Solicitudes de Tramite” website.
~ ~ ~ ~ Choose “FORMATO MIGRATORIO PARA TRAMITES DE ESTANCIA“
~ ~ ~ ~ Under “QUE DESEA HACER“: Choose “Realiza actividades diferentes a las autorizades“
~ ~ ~ ~ Complete the online application, and bring a copy of the printed final form that shows your Pieza Number, to your INM Office.
~ ~ ~ ~ Bring passport & copies.
~ ~ ~ ~ Bring a comprabante & copies of your residence (CFE or JAPAY bill), your original “forma migratoria vigente“, your “comprabante de pago de derechos por recepcion, examen y esudio de las solicitud, si las caracteristica del extranjero es la de turistica … $491.00” for expats who have just entered Mexico on a tourist visa.
~ ~ ~ ~ Bring “El pago de derechos correspondiente al otorgamiento de la nueva caracteristica por adquirir debera realizarse al momento de tramitar la expedicion de la forma migratoria. Comprabante de pago de derechos. Actividades No Lucrativas: $1.294.00, con fundamento en el Articulo 8, fraccion II, B) de la LFD“
~ ~ ~ ~ and: “Las cartas deberan estar bien especificadas que su salario lo recibira en Estados Unidos.“

The supervisor said they would gladly issue an “No Inmigrante Visitante Otros – No Lucrativa” – “FM3″ – visa/permit to a foreigner who met these requirements.

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If you liked this article, you might also check out our growing body of articles on tax issues for expats in Mexico:
~ Capital Gains Taxes on Mexican Properties
~ Income Tax Liabilities in Mexico
~ Fideicomisos and FATCA: US – Mexico Agreement on FATCA Reporting Requirements
~ IRS Reporting Requirements for Mexico: Fideicomisos / Mexican Land trusts
~ FBAR’s and Fideicomisos: To File or Not to File, That is the Question ,
~ US Income Tax Filing Information for Ex-Pats
~ Tax Issues for Americans and Other Expats Living in Mexico
~ Updated 2011 IRS Requirements: Foreign Account Tax Compliance Act (FATCA)
~ Summaries of US Tax Laws Affecting Citzens Living Abroad
~ Comparing Tax Rates and Tax Policies for US Earned Income and Mexican Earned Income
~ Tax Issues for Americans Living and Working in Mexico – A Redux for 2013
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Disclaimer: This information is not meant as legal advice. It is for educational and informational purposes only. Government policies vary between States and offices, and Mexican Government officials have broad discretion in how they individually enforce policies, so, your personal experiences may vary. See a professional for advice on important issues.

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© Steven M. Fry

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