Tax: Mexico

Purchaser is required to pay Value Added Tax (“VAT”) at the rate of 16% if the sale occurs or if the aircraft is delivered within the Mexican territory. VAT is also triggered if the aircraft being sold is or is expected to be registered in Mexico (even if the aircraft is not located in Mexican territory) to the extent seller is a Mexican tax resident or a foreign resident with a permanent establishment in Mexico. 

Not applicable in Mexico.

In this case seller must treat the sale as exportation.  Seller is required to transfer VAT to the foreign purchaser at the rate of 0% (special invoice requirements have to be complied). 

Please refer to question 3.

Importation of the aircraft is subject to VAT at the rate of 16%, general importation tax and customs duties payable by the importer.   

Temporary importations are neither subject to VAT nor general importation tax. 

No.

Yes, registration duties must be paid to the Civil Aviation General Bureau.

No.

Rental income received by a non-Mexican tax resident is subject to income tax withholding if the aircraft is used in Mexico. Mexican law presumes that an aircraft is used in Mexico in an active trade or business when lessee is a Mexican tax resident or a foreign resident with a permanent establishment in Mexico. The payer is required to withhold at the rate of 25%. If the aircraft is operated in Mexico under an air transportation concession or permit granted by the Mexican Federal Government (Civil Aviation General Bureau), then it is  subject to a 5% withholding rate as long as the aircraft is used to render public transportation services. Such rate is reduced to 1% if the Mexican resident bears the income tax withholding and the relevant operating  lease agreement provides for the foregoing.   

Depends on the specific circumstances of the Mexican taxpayer, but normally costs associated to the operation and use of a commercial aircraft may be tax deductible.  

Depends on the specific circumstances of the Mexican taxpayer, but normally costs associated to the operation and use of a corporate/private aircraft may be partially or non–tax deductible.  

For tax purposes, finance leases are treated as a sale. The difference between the total agreed upon payments and the price paid is considered interest and is taxed accordingly. The payer is required to withhold income tax at the rate of 15% on the relevant interest part. Tax treaty benefits may allow for a reduced withholding rate on interest payments. 

Interest derived from loans paid to a foreign tax resident in a country with which Mexico has a treaty to avoid double taxation is subject to a withholding rate of 4.9%. The payer is required to withhold income tax. 

No.

Yes, airport use tariff is a tax collected by the airlines and charged to passengers (domestic and international) on departing flights per airport (plus VAT). It is determined by the airport concession holder for the rendering of airport services and primarily used to enhance airport infrastructure.   

Yes, jet fuel is taxed according to the special tax on production and services. The taxation rate is generally updated every year.  

No.