Navigating Mexican VAT: Cash Flow, Compliance, and Traps for Multinational Companies

• VAT in Mexico is only creditable if a valid electronic invoice (CFDI) is issued and the expense is actually paid, unlike the accrual basis in the EU.
• Delays in supplier payments can lock up significant VAT amounts, creating cash flow challenges for multinationals.
• Certain exemptions (e.g., unprocessed food, housing rentals, education, wages) can lead to unexpected embedded costs for companies.
• VAT refunds in Mexico are slow (6-12 months) and subject to detailed audits, tying up liquidity for exporters and businesses with high input VAT.
• Additional complexities include VAT withholding on services from individuals, special border rates, and strict documentation requirements for 0% export VAT.

Source: ggi.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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