Taxation

Transfer Tax: is a tax on the passing of title to property from one person (or entity) to another. In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property.

This kind of tax is typically imposed where there is a legal requirement for registration of the transfer, such as transfers of real estate, shares, or bond. Examples of such taxes include some forms of stamp duty, real estate transfer tax, and levies for the formal registration of a transfer. In some jurisdictions, transfers of certain forms of property require confirmation by a notary.

While notarial fees may add to the cost of the transaction, they are not a transfer tax in the strict sense of the term.

V.A.T.: A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the “value added” to a product, material or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs. Currently the VAT in Mexico is 16%.

Capital gain tax: Capital Gains Tax is a tax on the profit or gain you make when you sell or dispose of an asset.

You usually dispose of an asset when you cease to own it – for example if you:

  • sell it
  • give it away as a gift
  • transfer it to someone else
  • exchange it for something else
  • receive compensation for it – for example you receive an insurance payout when an asset has been destroyed

 It’s the gain you make, not the amount of money you receive for the asset

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