With its beautiful beaches, ancient ruins, and vibrant culture, Mexico is a popular destination for travelers. But one thing that often surprises visitors are the various hotel taxes added onto accommodation bills.
This guide will explain the common taxes applied to hotel stays across Mexico so you can better understand the full cost of your vacation budget.
If you’re short on time, here’s a quick answer: Hotel taxes in Mexico often add 16% or more onto quoted room rates. The main taxes are IVA (value-added tax), IEPS (special tax on lodging), and ISH (hotel occupancy tax), along with local taxes that vary by state and city.
Overview of hotel taxes in Mexico
When planning a trip to Mexico, it is important for travelers to understand the different hotel taxes that may be applied to their accommodations. These taxes are imposed to generate revenue for the government and support various public services and infrastructure.
Here is an overview of the three main hotel taxes in Mexico:
IVA – National value-added tax
The IVA, or Impuesto al Valor Agregado, is a national value-added tax that is applicable to various goods and services in Mexico, including hotel accommodations.
The current rate for IVA is 16%. This tax is typically included in the total cost of the hotel room and is paid by the guest upon check-out. It is important for travelers to budget for this additional expense when planning their stay in Mexico.
IEPS – Special lodging tax
The IEPS, or Impuesto Especial sobre Producción y Servicios, is a special lodging tax that is specifically applied to hotel accommodations.
The rate for IEPS varies depending on the location of the hotel, with rates ranging from 2% to 3% of the total cost of the room. This tax is also included in the final bill and is paid by the guest during check-out.
ISH – Local hotel occupancy tax
The ISH, or Impuesto Sobre Hospedaje, is a local hotel occupancy tax that is imposed by specific municipalities within Mexico.
The rate for ISH varies depending on the location of the hotel, with rates ranging from 2% to 5% of the room rate.
This tax is typically not included in the total cost of the room and is paid by the guest directly to the hotel. It is important for travelers to inquire about the specific ISH rate at their chosen hotel.
It is worth noting that these tax rates and policies may vary depending on the state and municipality in Mexico. Therefore, it is recommended for travelers to check with their hotel or consult official government websites for the most accurate and up-to-date information on hotel taxes in their desired destination.
Other taxes and fees to look out for
Tourist taxes in resort areas
When staying in a hotel in Mexico’s popular resort areas, it’s important to be aware of the tourist taxes that may be imposed. These taxes are typically charged per night, per room, and can vary depending on the specific location.
For example, in the municipality of Benito Juarez where Cancun is located, there is an Environmental/Sanitation Tax of 67.35 Mexican pesos (approximately $3.88 USD) per room, per night. This tax will usually be added to your hotel bill and paid upon check-out.
Hospitality surcharges
In addition to tourist taxes, some hotels in Mexico may also add a hospitality surcharge to the final bill. This surcharge is designed to cover the cost of providing extra services and amenities to guests.
It’s important to check the hotel’s policy on hospitality surcharges before making a reservation, as these fees can add up quickly. Some hotels may include the surcharge in the nightly rate, while others may add it as a separate fee.
Resort fees
Another fee to be aware of when booking a hotel in Mexico is the resort fee. This fee is typically charged per night and covers the use of resort amenities such as pools, fitness centers, and Wi-Fi. The amount of the resort fee can vary depending on the hotel and the amenities offered.
It’s important to read the fine print when booking a hotel to understand if a resort fee will be charged and what it includes.
It’s worth noting that not all hotels in Mexico charge these additional taxes and fees. Some smaller, boutique hotels may not have any additional charges beyond the room rate. However, for larger resorts and chain hotels, it’s common to see these taxes and fees added to the final bill.
When planning a trip to Mexico, it’s always a good idea to budget for these additional taxes and fees to avoid any surprises at checkout. Checking the hotel’s website or contacting them directly can provide more information on the specific taxes and fees that may be applicable.
Tax rates by popular tourist destination
Cancun/Riviera Maya
When it comes to hotel taxes in the Cancun and Riviera Maya area, visitors can expect to pay a tax rate of approximately 19%. This includes a 16% value-added tax (VAT) and a 3% lodging tax. These taxes are typically included in the total cost of your hotel stay, so you don’t have to worry about paying them separately.
Los Cabos
In Los Cabos, the tax rate for hotels is slightly lower than in Cancun and Riviera Maya.
Visitors can expect to pay around 18% in taxes, which includes a 16% IVA, plus 2% Accommodation Tax. The lodging tax is not applicable in this region, making it a bit more budget-friendly for travelers.
Puerto Vallarta
In Puerto Vallarta, you’ll encounter a similar but slightly different tax situation compared to Cancun and Los Cabos, with nuances to consider when budgeting.
Visitors can expect to pay around 21% to 23% tax in Puerto Vallarta: 16% IVA + 2% Lodging Tax + 3-5% ISH. Like Los Cabos, there is no lodging tax in Puerto Vallarta.
Mexico City
When staying in Mexico City, travelers can expect to pay a tax rate of approximately 19%, similar to the rates in Cancun and Riviera Maya.
This includes a 16% VAT and a 3% lodging tax. Keep in mind that some smaller, independent hotels may not charge the lodging tax.
Oaxaca
In the charming city of Oaxaca, the tax rates are typically lower compared to other popular tourist destinations in Mexico. Visitors can expect to pay around 16% in taxes, which includes a 16% VAT. There is no lodging tax in Oaxaca, making it a more affordable option for travelers.
It’s important to note that these tax rates are subject to change, so it’s always a good idea to check with your hotel or travel agent for the most up-to-date information.
Additionally, some hotels may include these taxes in the room rate, while others may charge them separately. Be sure to clarify with your hotel to avoid any surprises.
For more information on hotel taxes in Mexico, you can visit the official website of the Mexican government’s tax authority.
Who collects hotel taxes in Mexico?
When it comes to hotel taxes in Mexico, there are two main entities responsible for their collection: hotels themselves and online booking sites. Let’s take a closer look at how each of these entities collects and handles these taxes.
Taxes collected by hotels
Hotels in Mexico are required by law to collect certain taxes from their guests. These taxes include the Value Added Tax (VAT) and the lodging tax, also known as the Room Tax or Tourist Tax.
The VAT is a federal tax that is levied on the sale of goods and services, including hotel accommodations. The current rate of VAT in Mexico is 16%. Hotels are responsible for collecting this tax from their guests and remitting it to the Mexican government.
The lodging tax, on the other hand, is a local tax imposed by the state or municipality where the hotel is located. The rate of this tax varies depending on the destination, but it is typically around 3% to 5% of the room rate. Hotels collect this tax from their guests and pass it on to the relevant local authorities.
Taxes collected by online booking sites
In recent years, the rise of online booking sites has changed the way people book hotels in Mexico. These platforms, such as Booking.com and Expedia, not only offer a convenient way to find and book accommodations but also handle the collection of taxes on behalf of the hotels.
When you book a hotel through one of these online booking sites, the taxes, including VAT and the lodging tax, are often included in the total price you see. The booking site then takes care of remitting these taxes to the respective authorities. This simplifies the process for travelers and ensures that the taxes are properly collected and paid.
It is important to note that while online booking sites collect and remit the taxes, the ultimate responsibility for tax compliance lies with the hotels themselves. The hotels are still required to report and pay the taxes to the authorities, and the online booking sites are merely facilitating the process.
For more information on hotel taxes in Mexico, you can visit the official website of the Mexican Tax Administration Service (SAT).
Getting exemptions from hotel taxes
While staying at a hotel in Mexico, it’s important to understand the taxes that are applied to your bill. However, there are certain situations where you may be eligible for tax exemptions. This can help you save money and make your stay more affordable.
Here are some ways you can get exemptions from hotel taxes:
Tax exemptions for Mexican citizens
Mexican citizens have the opportunity to receive tax exemptions when staying at hotels within the country. This is particularly beneficial for those who frequently travel within Mexico for work or leisure.
To take advantage of this exemption, individuals must present their Mexican voter ID card, known as the INE, at the time of check-in. This will help verify their citizenship and ensure that the tax exemption is applied to their bill.
Tax exemptions for select foreign visitors
Some foreign visitors may also be eligible for tax exemptions when staying at hotels in Mexico. The tax exemption is typically applicable to individuals who hold a diplomatic passport or who are part of an international organization.
To qualify for this exemption, travelers must present their valid diplomatic passport or proof of affiliation with the international organization at the time of check-in. It’s important to note that not all foreign visitors are eligible for this exemption, so it’s best to check with the hotel or the Mexican government’s official website for more information.
Applying for exemptions as a business traveler
Business travelers often have the opportunity to apply for tax exemptions when staying at hotels in Mexico. These exemptions are typically available for individuals who are traveling for business purposes and can provide documentation to support their claim.
To apply for the tax exemption, business travelers should gather invoices and receipts that clearly show the purpose of their stay and the expenses incurred. It’s recommended to consult with the hotel or a tax professional to ensure that all necessary documents are provided and that the exemption is properly applied.
Understanding and taking advantage of tax exemptions for hotel stays in Mexico can help individuals and businesses save money during their trips.
It’s important to familiarize yourself with the specific eligibility requirements and necessary documentation for each exemption to ensure a smooth and hassle-free process. By doing so, you can make your stay in Mexico even more enjoyable and budget-friendly.
Final tips for understanding Mexico hotel taxes
Ask exactly what taxes are included
When booking a hotel in Mexico, it’s important to understand what taxes are included in the total price.
Different hotels may have different tax policies, so it’s always a good idea to ask the hotel directly about the taxes that are included in the price. This will help you avoid any surprises when it comes time to pay your bill.
Some of the common taxes that may be included in the price of your hotel stay in Mexico include the Value Added Tax (VAT) and the Lodging Tax.
The VAT is a federal tax that is applied to most goods and services in Mexico, including hotel accommodations. The Lodging Tax, on the other hand, is a tax that is specific to the lodging industry and is charged by the local government.
By asking the hotel about the specific taxes that are included in the price, you can better understand the breakdown of your bill and ensure that you are not being charged any additional taxes that you were not aware of.
Factor taxes into negotiation
When negotiating the price of a hotel room in Mexico, it’s important to factor in the taxes that will be added to the final cost. Keep in mind that taxes can significantly increase the total price of your stay, so it’s important to consider this when negotiating with the hotel.
For example, if you are negotiating a rate of $100 per night for a hotel room and the taxes amount to 16%, the total price of your stay would actually be $116 per night. By factoring in the taxes during the negotiation process, you can ensure that you are getting the best possible deal.
Additionally, it’s worth noting that some hotels may be willing to negotiate on the taxes themselves. While this may not always be the case, it doesn’t hurt to ask if there is any flexibility in the tax amount.
Save receipts for reimbursement
If you are traveling to Mexico for business purposes, it’s important to save your hotel receipts for reimbursement. Many companies require detailed receipts in order to reimburse employees for their business expenses, including hotel accommodations and taxes.
By saving your hotel receipts, you can provide the necessary documentation to your employer or accounting department to ensure that you are properly reimbursed for the taxes you paid during your stay.
It’s also worth mentioning that some countries have tax refund programs for tourists, where you can claim a refund on the taxes you paid during your trip.
While Mexico does not currently have a tax refund program for tourists, it’s always a good idea to check with the local authorities or visit their official tourism website for the most up-to-date information.
Conclusion
With tax rates reaching 16-19% in many areas, hotel taxes undoubtedly add a significant amount on top of base room rates in Mexico.
Understanding the standard taxes like IVA, IEPS and ISH, as well as any local surcharges, is key for budgeting accurately. Make sure to ask your hotel or booking provider exactly what taxes and fees are included to avoid sticker shock at checkout.
While taxes are non-negotiable, being informed puts you in a better position to get the best deal. You can also inquire about any exemptions that may apply to you as a Mexican national, business traveler, or qualifying foreign visitor in order to potentially save on your hotel stay in Mexico.
