Are Landscaping Services Taxable in New Mexico? Taxation in New Mexico and Mexico

Gross Receipts Tax in New Mexico

New Mexico imposes a gross receipts tax on businesses, applying to most goods and services including digital goods delivered electronically. Small businesses are required to collect and pay this tax, and the total tax rate can reach up to 9.0625%. Failure to comply with these regulations can lead to penalties.

The gross receipts tax applies to the total amount of money a business receives for its transactions. Businesses typically pass this tax on to the consumers as part of the selling price. Tax rates vary by location, ranging from 5.125% to 9.0625%.

Exemptions from Sales Tax

Exemptions from New Mexico’s sales tax include some groceries and prescription medicine. It’s important to note that certain items may be exempt to all consumers, not just tax-exempt purchasers. This list includes prescription medicine, groceries, gasoline, and potentially restaurant meals, which may have a special sales tax rate. The classification of candy and soda as groceries can affect their taxation.

Taxation for Individuals and Businesses in Mexico

For individuals living in Mexico, worldwide income is taxable. Non-residents are taxed only on their Mexican-sourced income, with the first $7,000 being exempt. Tax rates for non-residents can be either 15% or 30%.

Companies are considered Mexican residents for tax purposes if they are managed within the country. These businesses are taxed on their worldwide income. For foreign companies, the corporate tax rate in Mexico is 30%, with potential reductions for those in agriculture and livestock industries. A foreign entity is deemed to have a permanent establishment, and thus subject to taxation, if it has a place of business in Mexico.

Taxable Professional Services

Professional services, such as legal and architectural services in New Mexico, are generally taxable unless they are specifically exempted by law. Businesses providing these services are advised to register for a tax permit, which can be done online or by mail.

Frequently Asked Questions

Are professional services subject to sales tax in New Mexico?

In New Mexico, professional services like legal and architecture are subject to sales tax unless they are exempt.

What services are exempt from sales tax in New Mexico?

In addition to some groceries and prescription medicine, exemptions may apply to gasoline, restaurant meals, and possibly candy and soda, depending on the state’s classification of these items as groceries.

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