Simplified Trust Regime: Who Qualifies and What You Get
Small business owners and freelancers in Mexico can access significantly lower tax rates through this simplified regime if they meet specific income limits.
The Simplified Trust Regime is a specific tax framework designed to provide lower income tax rates for small business owners and freelancers.
Who it's for
This regime is intended for individuals working as freelancers or running small businesses. To qualify, your total annual income must stay below the threshold of 3.5 million MXN. This allows smaller earners to benefit from a more streamlined approach to managing their professional finances.
What you get
The primary advantage of this regime is the application of low income tax rates. Instead of the higher rates applied to other tax categories, participants in this regime benefit from rates ranging from 1% to 2.5%. This reduction is designed to make tax compliance easier and more affordable for those running smaller operations.
What it costs you
While the tax rates themselves are low, there is an administrative requirement to manage your own records. You are responsible for performing monthly electronic filings. These must be submitted through the official portal provided by the Servicio de Administración Tributaria to ensure your income and taxes are recorded correctly.
The catch to know
The most important requirement to remember is the strict rule regarding documentation. You must issue an electronic invoice, known locally as a CFDI, for every single service you provide. Failure to provide these digital invoices for your work can impact your standing within the regime.
How to apply
- Verify that your projected annual income is under the 3.5 million MXN limit.
- Visit the official government portal to register for the Simplified Trust Regime.
- Ensure you have a reliable method to issue a CFDI for every service rendered.
- Log in to the official portal each month to complete your electronic filings.