Economic package - Tax reform Bill for 2027

On September 8, 2026, the Federal Executive submitted to the Mexican Congress, the Tax Reform Bill for fiscal year 2027.

The proposed Tax Reform Bill does not include the creation of new taxes or the increase of taxes in effect; however, it defers and limits several authorized deductions for income tax purposes.

The Bill will be subject to discussion prior to its final approval by Congress; therefore, it may be subject to adjustments or changes thereof.

Below please find our comments regarding relevant changes under the proposed Tax Bill for 2027, which will come into effect as of January 1^st, 2027, as follows:

INCOME TAX LAW BILL FOR 2027

• There are no increases in current tax rates or tax tables, there is greater tax review and enforcement.
• The taxable base is increased for taxpayers with annual revenues exceeding 50 million pesos (USD 3 million approx.) reported as taxable income in the fiscal year.
• Deductions are limited to 96.67% or 99% of the accrued income, depending on whether deductions are lower or higher than the accrued income for the fiscal year concerned.
• The profit coefficient for corporate income tax monthly payments on account will be adjusted by the factor of 1.0658 or 2.6162, depending on whether deductions are lower or higher than the accrued income for the fiscal year concerned.
• The deduction limitations will not apply to the calculation of employee profit sharing (“PTU”).
• A guaranteed minimum tax profit equivalent to 3.33% is determined, that is, 1% effective corporate income tax rate for the fiscal year.
• Deductions not taken in the fiscal year may be applied within a 20-year period.
• Certain taxpayers are exempt from applying the limits established for deductions.
• Tax losses from prior years may be applied up to 50% of the taxable income as determined by the corporate income tax monthly payments on account and in the annual corporate income tax return.
• Tax losses pending amortization may be carried forward over the following 20 fiscal years until fully used.
• The limit of deduction for determining the “net interests” is reduced from 30% to 20%.
• Advance payments made for the provision of services or lease of assets will be deducted when the services are effectively provided or the period of use of the asset elapses.
• The “Optional Regime for Groups of Companies” is eliminated.
• Payments to foreign residents will be deducted when the consideration is effectively paid and the respective withholding tax is remitted.
• For the calculation of Net Tax Profit (“UFIN”), for the fiscal year, whether positive or negative, non-deductible expenses that do not meet the applicable tax requirements must be decreased.
• Accrued unpaid interest and the value added tax (“VAT”) derived from the capitalization of liabilities do not increase the tax cost of acquisition of shares in addition to the balance of the Capital Contributed Account (CUCA).
  

OTHER TAX LAWS BILL FOR 2027

• A 0% VAT rate is granted as a tax incentive for the sale of books, newspapers and magazines.
• The same monthly surcharge rates applicable in the fiscal year 2026 are also maintained for fiscal year 2027.
• The annual withholding tax rate on interest paid by institutions of the financial system is reduced from 0.90% to 0.68% for fiscal year 2027.
• Funds or resources of lawful origin held abroad by Mexican residents, as of September 08, 2026, may be repatriated at a 7.5% tax rate.
• The tax regularization program is maintained for individuals and legal entities with 2025 revenues not exceeding $300 million pesos (USD 17 million approx.)
• Individuals resident in Mexico as well as foreign resident individuals and companies may apply, as a tax incentive, a 10% income tax rate on the gain derived from the sale of shares of Mexican companies through the stock exchange in an initial public offering (IPO).

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