Mexico
Contributor: Juan Carlos Machorro, Karina Robledo, Ricardo Orea and Andrés Remis
1. Will the relevant law require any sales, value added or other taxes to be payable on a domestic sale/purchase or transfer of title/interest of an aircraft?
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.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
2. Will the relevant law require any sales, value added or other taxes to be payable on an intra EU sale/purchase or transfer of title/interest of an aircraft?
Not applicable in Mexico.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
3. Will the relevant law require any sales, value added or other taxes to be payable on a sale/purchase or transfer of title/interest of an aircraft in that jurisdiction if the purchaser is a foreign entity and will export the aircraft to another country?
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).
a. If so, by whom, at what rate and are there any exemptions available?
N/A
4. Will the relevant law require any export tax and/or customs duties to be payable on the export of an aircraft in the relevant jurisdiction?
Please refer to question 3.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
5. Will the relevant law require any import (value added) tax and/or customs duties to be payable on the import of an aircraft in the relevant jurisdiction?
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.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
6. Will the relevant law require any stamp duties or fees and/or documentary taxes to be payable upon the execution of any aircraft transaction documents in the relevant jurisdiction?
No.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
7. Will the relevant law require any taxes or duties on registering the aircraft?
Yes, registration duties must be paid to the Civil Aviation General Bureau.
8. Are there any luxury taxes payable in your jurisdiction in relation to aircraft?
No.
9. Will the relevant law require any income, withholding or other taxes to be payable in respect of payments made by an aircraft lessee to a lessor?
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.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
10. What are the tax implications for operation and use of commercial aircraft?
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.
11. What are the tax implications for operation and use of corporate and/or private aircraft?
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.
12. Will the relevant law require any taxes to be payable on aircraft loan repayments (income tax and interest)?
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.
a. If so, by whom, at what rate and are there any exemptions available?
N/A
13. Does the relevant law have any environmental or carbon emission taxes or schemes?
No.
14. Will the relevant law require any cargo, airport (departure) or passenger taxes?
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.
15. Will the relevant law require any aviation fuel taxes?
Yes, jet fuel is taxed according to the special tax on production and services. The taxation rate is generally updated every year.
16. Are there any other taxes specific to aircraft (not already mentioned above) in the relevant jurisdiction?
No.