Charged at 16%
IVA (Value Added Tax) is charged on most goods and services at the rate of 16% and is normally included in the price displayed. Certain food and medical items are exempt.
Unless you are involved in a business, you’ll hardly notice you are paying IVA.
If you run a business, things get a little more complicated. In order to write off (allowable deductibles against revenue) the IVA and, for that matter, the actual expense, you must get a “Factura” (official government receipt). The problem here is that many small businesses “elect not to participate” in the system (too much paperwork and it highlights their revenue–remember Mexico is mostly a cash society with an underground economy), so they will not provide a Factura. A part of doing business in Mexico and you learn to work with it. The problem is many times they don’t tell you they won’t provide a Factura.
When we first started our business and I would go into one of the local paper tiendas (shops) to purchase office supplies, I would always ask first if they could/would give me a Factura. Most times they would say “yes” (because they wanted to make the sale), but I would need to come back next Tuesday to get it. They hoped I wouldn’t, but if I did, they would tell me to come back again.
Many of these Mom and Pop stores don’t exist officially so they don’t have a tax number and therefore cannot give you a Factura. And even if they do, they prefer not to and usually aren’t charging the 16% tax on the item, so if you insist on getting the receipt, the item will go up in price by the amount of the tax. However, in recent years the government has been clamping down and finding ways of taxing small business owners.
I soon caught on and just had to make the conscious decision that if I bought the item from small shops, the realization was that we would not be able to expense it. So for big ticket items, we would make the trip to Guadalajara to a larger store, like Office Depot, that would give Facturas.
If you're thinking about starting a business, you can't afford not to come on a Focus on Mexico Fast Track program. The things you learn will benefit you in more ways than you can possibly know!
|Rick & Veronica Slamon, New Westminster, BC
|“The format is well-thought out. Focus has achieved a nice balance of providing an abundance of information about the banking system, immigration visas, the healthcare system, insurance, Mexican Law, investment, and of course the Chapala and Ajijic real estate market. Most of this information was provided by guest speakers - informed residents and professionals, knowledgeable in the topic at hand. Visitors with specific questions about their personal situations were handled on an individual basis - if an answer was not at hand, the staff made it their business to research the question and always seemed to be able to come up with an answer. We have been traveling to other parts of Mexico for several years and are aware of many of the pitfalls and problems encountered by Canadians and Americans. As well as learning much, we can personally attest to the accuracy and factualness of the information presented. "The tour was worth every dime!”
You'll find out a lot more and the most up-to-date information when you listen to our Expert Speaker, Erika Torres, of Multia talk about where Mexico's been and where it's going and how YOU can benefit! It's an eye-opening experience.
|Sandy Cunningham, Alberta, Canada
|"I found Erika's talk very interesting. The information presented gave me a better insight into the economy of Mexico and helped me decide to invest within the country."The educational segments were well planned and presented in a way that made the information flow. I also really appreciated the extra time allotted for each of us to have questions answered to our specific needs."
|Mimi Bratu, Mantachie, MS
|"I am not that interested in economics myself, but Erika's presentation was very informative. She really knows her stuff! And the most fascinating thing is she spouted most of it without even looking at the screens. She has a very positive attitude about the Mexican economy and expresses very clearly...that it's only getting better all the time! And you can tell she really loves what she does. It shows."
(updated May 2014)