Expense Reimbursement policy in Mexico

Modified on: Mon, 15 Sep, 2025 at 9:11 PM

TABLE OF CONTENTS

Submission Timelines
Eligible Expense Categories
Payment Methods
Documentation Requirements
- Important Considerations
- Legal References

Horizons supports the reimbursement of business-related expenses in Mexico, provided they comply with both Mexican tax regulations and internal company policies. This guide outlines the requirements, timelines, and documentation needed to ensure tax-compliant and timely reimbursements.

Submission Timelines

Expenses must be submitted and approved within the same calendar month in which they were incurred.
If expenses are submitted after the deadline, they will be reimbursed in the next payroll cycle.

Approval Deadline:
To meet local accounting requirements, ensure that all expense reports are submitted and approved by the 5th of the following month. Each invoice must clearly indicate the month in which the reimbursement is requested.

Eligible Expense Categories

Reimbursable expenses must be reasonable, necessary, and directly related to business activities. Common categories include:

Airfare and transportation (taxi, metro, bus, shuttle)
Lodging (standard business room rates)
Meals (excluding alcohol)
Fuel and tolls
Parking (with proper invoice)
General business-related purchases

Payment Methods

Invoices Over $2,000 MXP:
These should be paid using a credit or debit card, rather than cash.
Fuel Payments:
All fuel purchases must be made with a credit or debit card, regardless of the amount.
Submitting Vouchers:
When paying with a credit or debit card, always include the payment voucher with your expense report.

Documentation Requirements

To qualify for tax-free reimbursement, the following rules apply:

Invoice Issuance:
All business-related invoices must be issued to Horizons GT Mexico S. de R.L. de C.V., not to the individual employee. This applies to expenses like phone bills, insurance, and similar costs.

Expenses that do not meet documentation requirements will be treated as compensation and processed via payroll, subject to withholding taxes.
Properly documented expenses are tax-free and fully reimbursable.

Tax Receipt Requirements (for Mexican Expenses):

Obtain an electronic invoice (CFDI).
Ensure the invoice includes the RFC (Tax ID) of both the issuer and Horizons GT Mexico.
Include the folio number, SAT digital seal, and the place and date of issue.
Detail the quantity, unit of measurement, type of goods or services, and the total amount.

Tax Receipt Requirements (for International Expenses):

The invoice should include the name, address, and tax identification number (or its equivalent) of the foreign issuer.
Include the RFC or full name “HORIZONS GT MEXICO.”
State the transaction amount in numbers or letters.
Specify the quantity, unit value, and description of goods, if applicable.

Non-Deductible Expenses:

Expenses for consumption in bars.
Restaurant expenses within 50 km of Mexico City (91.5% of these are non-deductible).
Purchases of gifts not intended for all clients.
Fines.

Important Considerations

Grossing Up: If an expense does not meet the required standards, it may be classified as income and subjected to a gross-up of 30%-40% on the employer's payroll, leading to higher costs.
Per diems are not allowed under Mexican tax law.
Medical expenses may be reimbursed only if aligned with company policy and supported by valid documentation.

Legal References

These processes are in line with the following regulations:

Article 29 CFF, Requirements for Tax Receipts
Article 27 LISR, Requirements for Deductions
Rule 2.7.1.14 RFM, Tax Receipts Issued by Foreign Residents

By adhering to these guidelines, you can ensure that your expense reports are processed smoothly, in compliance with Mexican laws, and without incurring unnecessary additional costs.
Alternatively, take a look at the below attachment for a more detailed overview.

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