Mexico’s RICO (Régimen de Incorporación Fiscal) offers a streamlined tax framework for freelancers, digital nomads, and small‑scale entrepreneurs who become tax residents in the country. Effective for the 2025 fiscal year, the regime caps income at MXN 3.5 million (≈ USD 175 k) for individuals and provides progressive rates from 1 % to 2.5 % on gross income, along with simplified monthly reporting.
Why the RICO regime stands out
- Low rates – Progressive tax rates of 1 % – 2.5 % on gross income, compared with the standard 30 % rate for the general regime.
- Simplified compliance – No detailed bookkeeping or deduction calculations; taxpayers make fixed monthly payments.
- Foreign‑resident eligibility – Both temporary and permanent residents who meet the residency test (≥ 183 days in Mexico or primary economic interests in the country) can enrol.
- Targeted at small businesses – Designed for individuals earning up to MXN 3.5 million annually, covering roughly 82 % of Mexican taxpayers.
Who can join (individuals)
| Requirement | Detail |
|---|---|
| Tax residency | ≥ 183 days in Mexico per year or primary economic interests located in Mexico. |
| Income ceiling | ≤ MXN 3.5 million (≈ USD 175 k) from eligible activities. |
| Eligible activities | • Business activities (e.g., online stores, retail, restaurants) • Professional services (design, programming, consulting, coaching) • Leasing (including short‑term rentals such as Airbnb) • Primary activities (agriculture, livestock, fishing, forestry). |
| Exclusions | • Partners/shareholders in a for‑profit corporation • Taxpayers under preferential regimes abroad (tax havens) • Income classified as “asimilados a salarios” (assimilated wages) • Residents abroad with a permanent establishment in Mexico. |
RICO tax rates for individuals (2025)
- 1 % on income up to MXN 50 k
- 1.1 % on income up to MXN 125 k
- 1.5 % on income up to MXN 250 k
- 2 % on income up to MXN 500 k
- 2.5 % on income up to MXN 3.5 million
Taxes are calculated on a cash‑flow basis: only income actually received is taxed. No deductions are permitted, so accurate income tracking is essential.
Required documentation
- RFC – Federal Taxpayer Registry number (issued by SAT).
- CURP – Unique personal identification code.
- Proof of Mexican tax residency – Utility bill or similar document showing a Mexican address.
- Mexican bank account – Needed for tax payments and refunds.
- Tax mailbox (Buzón Tributario) – Mandatory electronic mailbox for SAT communications (required from 2025).
Registration and compliance steps
- Obtain an RFC from SAT.
- Enroll in RICO via the SAT portal, updating economic activities as needed.
- Activate the tax mailbox (Buzón Tributario) and electronic signature (e.firma).
- Submit monthly provisional payments by the 17th of each month; these are definitive, eliminating the need for an annual return unless you have non‑RICO income (e.g., salaried wages).
- Issue electronic invoices (CFDI):
- For each client, issue a standard CFDI.
- For multiple transactions with the same client, a single monthly CFDI may be issued by the 3rd day of the following month.
- File VAT (IVA) returns monthly by the 17th, charging 16 % on taxable activities; no VAT exemptions apply under RICO.
- Maintain records for at least five years in case of SAT audits.
Processing time for registration typically ranges from 1–3 weeks; activation of the tax mailbox and e.firma may take longer for first‑time filers.
Key compliance considerations
- Exceeding the MXN 3.5 million threshold automatically moves the taxpayer to the general regime with higher rates.
- Falling below the threshold in a subsequent fiscal year allows re‑entry into RICO, provided all obligations are met.
- Providing services to foreign clients (e.g., U.S. companies) must not be re‑characterized as dependent employment, which could trigger social security contributions.
- Non‑compliance with the tax mailbox requirement can result in fines.
RICO for corporations (small legal entities)
- Eligibility: Mexican‑resident legal entities (e.g., S.A. de C.V.) with only individual shareholders, no corporate partners, and annual revenue ≤ MXN 35 million (≈ USD 1.75 million).
- Exclusions: Entities with shareholders controlling other companies, those under foreign preferential regimes, financial institutions, and non‑profits.
- Taxation: Flat 30 % corporate income tax on taxable profit, but cash‑flow accounting limits tax to collected income only.
- VAT: 16 % charged on taxable activities, with monthly filings.
- Compliance: Same monthly provisional payments, annual return, and CFDI issuance as for individuals; corporate RFC, articles of incorporation, shareholder details, and tax mailbox are required.
If corporate revenue exceeds MXN 35 million, the entity must switch to the general regime but can return to RICO if revenue falls below the limit and compliance is maintained.
2025 updates to the RICO regime
- Elimination of the update notice – No longer required to file a separate notice when transitioning into RICO.
- Mandatory tax mailbox – All RICO taxpayers must have an active Buzón Tributario.
- VAT refund flexibility – Adjustments to how VAT credits are claimed.
- Global CFDI cancellation – New procedures for cancelling electronic invoices issued abroad.
- Co‑ownership clarifications – Revised rules for shared‑ownership arrangements.
- Agricultural sector exemptions – Additional exemptions for certain rural activities.
- Increased audits – SAT will intensify verification of eligibility and compliance, especially for corporations.
Practical tips for a smooth RICO experience
- Secure the RFC early; processing can take several weeks.
- Engage a tax consultant if you are a foreigner or have complex income streams.
- Activate the tax mailbox promptly via the SAT website (sat.gob.mx) to avoid missed notices.
- Track income meticulously; set aside 5–10 % of monthly revenue for ISR and VAT obligations.
- Maintain basic Spanish proficiency to navigate SAT portals and documentation.
- Issue CFDIs correctly and respect filing deadlines (17th of each month for taxes, 3rd of the following month for consolidated CFDIs).
By adhering to these guidelines, freelancers, digital nomads, and small businesses can benefit from Mexico’s low‑rate, low‑burden RICO regime while remaining fully compliant with tax authorities.
