Written for Mexico. This analysis applies to Mexican federal tax law — ISR (income tax), IVA (VAT) and SAT rules — and cites Mexican statutes. Amounts are in Mexican pesos (MXN).
While your interest and rental income stack onto your taxable income at rates of up to 35%, market gains enjoy a privilege few grasp: a flat 10% on the gain (art. 129 LISR) — schedular, separate, without touching your bracket or contaminating your other income. It is, by design, the best tax treatment available to an individual in Mexico. The non-negotiable condition: trading through the Mexican securities market — and that is the trap that catches those who go straight to a US broker, the subject of the next article.
How the schedular market regime works
It applies to the sale of shares and securities on licensed stock exchanges (BMV and BIVA) — which includes the operational jewel: the SIC (International Quotation System), where you buy Apple, the S&P 500 or global ETFs listed in Mexico, at the same 10%. The Mexican brokerage calculates your net annual gain (sales minus average costs, with the year's losses offsetting gains), issues you the statement, and you report the flat 10% on the annual return. The year's net losses are not lost: they are carried forward against exchange gains for the next ten tax years (high confidence) — file your bad years; they are dormant tax credits.
Dividends are another channel (and another cost)
The 10% schedular rate is for capital gains; dividends have their own story: those from Mexican issuers arrive with the corporate tax already paid plus the additional 10% flat withholding on the dividend; those from foreign issuers via the SIC bear the source country's withholding (10% from the US under the treaty, provided the brokerage runs the right paperwork; 30% without it — ask your intermediary how the treaty is applied; the difference is real money) and are also added to income on your annual return at bracket rates, with a credit for the foreign tax. The strategic takeaway: in Mexico, accumulating vehicles (those that don't distribute) are more tax-efficient than distributing ones — every dividend is an annual toll that the capital gain defers until you decide to sell at 10%.
What the 10% is telling you
The 10% vs. 35% gap is an architecture instruction: for the long-term savings of an individual in a high bracket, equities via the Mexican exchange (including the SIC's entire global menu) dominate almost any alternative on tax — interest (bracket rates on real interest), rental income (bracket rates), business (30% + dividends). This is not investment advice — it is tax arithmetic: the same 10% annual gross return leaves 9.0% net on the exchange and ~6.5-7% in bracket-rate instruments. Labels: trading the SIC with a Mexican brokerage at 10% — safe (by express design); assuming your US broker gives you the same treatment — a mistake, not an interpretation (next article); and off-market transactions disguised as market ones (protected crosses, paper-listed companies to sell at 10%) — a classic red zone with express anti-abuse requirements in art. 129 itself.
Is your portfolio paying 10% — or 35% for being in the wrong account?
The investment-architecture audit answers in one session: which channel each position uses, how much ISR it is overpaying, the carryforward losses you are not using, the treatment of your foreign dividends, and the migration plan when it makes sense (which has its own effects — migrating also means selling). For seven-figure portfolios, the annual differential pays for the advice for decades.
Frequently asked questions
Does the 10% apply to the ETFs and funds I buy through my brokerage?
To listed ETFs (local and via the SIC), yes — they are exchange-traded securities. Mutual funds (sociedades de inversión) have their own mechanics depending on their type (debt vs. equity), with the fund manager withholding and reporting; equity funds generally keep the spirit of the exchange treatment. Your annual statement from each institution carries the classification — read it before you read the influencers.
Does day trading on the Mexican exchange also pay only 10%?
The schedular regime does not distinguish holding periods — but extreme frequency can be challenged as business activity, and art. 129 itself excludes certain cases (high percentages of a single issuer, off-market transactions). The typical active investor is comfortably inside; whoever moves controlling percentages or makes trading their business is in the analysis zone.
I lost money in the market this year — is it really worth filing?
Yes: the net loss certified in your statement can be carried forward against exchange gains for the next 10 years. Not filing it is burning a 10% discount coupon on your future profits. It is one of the 'annoying filings' with the best ROI in the system.
What if I have accounts at TWO Mexican brokerages?
Each one calculates and certifies on its own; in your annual return you combine both (gains from one offset losses from the other). It is a manual consolidation from the statements — another point where the SAT's pre-filled return is reviewed and corrected, not signed blindly.
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