¿Qué es y cómo se calcula el IVA?

What is the Value Added Tax (IVA) and How is it Calculated?

Understanding IVA

• The Value Added Tax (IVA) is a tax that all contributors must pay based on the added value of products or services purchased.

• In Mexico, the IVA represents an economic value added during the production process, exemplified by sugar derived from sugarcane.

Calculation of IVA

• The standard IVA rate in Mexico is 16%, with exceptions for certain goods and services.

• For example, if a civil engineer charges 100,000 pesos for services, he must calculate the applicable IVA at 16%.

Example Scenario: Civil Engineer's Income

• If the engineer's income is 100,000 pesos, the calculated IVA to be paid would amount to 16,000 pesos.

• As a self-employed individual, this engineer incurs expenses that also involve paying IVA.

Deductible Expenses and Creditable VAT

• The law allows deducting expenses related to business activities from the total IVA owed.

• Monthly expenses include office rent (3,000 pesos), utilities (500 pesos), and supplies (1,000 pesos), leading to a total expense of 4,500 pesos.

Final Calculation of Payable IVA

• From his expenses totaling 4,500 pesos, he pays an additional creditable VAT of 720 pesos.