Per Diem Rates in Mexico
Business travel often entails various expenses, and in Mexico, employers can reimburse employees for these costs through per diem. These reimbursements are not considered part of the employee’s taxable income, provided they adhere to specified limits and conditions. The tax-free limits and conditions are detailed in Article 28 of the Federal Income Tax Law (Ley del Impuesto Sobre la Renta Federal).
It’s important to note that the tax deduction is only allowed when the expenses are incurred outside a 50-kilometer radius from the employer’s base.
For domestic business trips within Mexico, the maximum tax-free amount for food and meals is MXN 750 per day. When travelling abroad, this limit rises to MXN 1500 per day. To qualify for tax-free treatment, employees must submit tax receipts or supporting documentation covering lodging or transportation expenses. Notably, if only food expenses are documented without transportation, tax deductions apply only when payment is made with the traveller’s credit card.
Car renting or leasing
The tax-free limit for car renting or leasing is set at MXN 850 per day, irrespective of the trip’s destination. Similar to food expenses, employees must provide suitable tax receipts or documentation that covers lodging or transportation.
Lodging and accommodation
When travelling abroad, the maximum tax-free daily limit for lodging and accommodation expenses is MXN 3850. To validate these claims, employees should include suitable tax receipts or documentation that covers transportation, such as flights, taxis and parking. Collectively, these types of documents reinforce the authenticity of the hosting service provided. Notably, for domestic business trips within Mexico, the law does not specify a limit.
Expenses for seminars or conventions
To deduct travel expenses linked to seminars or conventions, either domestic or international, the itemized amount must be on the tax receipt or in the supporting documentation. If this is not the case, the limit of tax-free reimbursement is the same as for Meals. Any surplus resulting from this consolidation will not be tax-deductible.