The Federal Executive submitted the Economic Package for fiscal year 2027 to the Mexican Congress. The package sets out the proposed economic, budgetary, and tax framework for the upcoming year, and the related bills remain subject to the corresponding legislative process.
The baseline economic scenario projects real GDP growth of between 1.5% and 2.5%, an estimated nominal GDP of MXN 39,419.4 billion, an average annual inflation of 3.2%, an average annual exchange rate of MXN 17.9 per U.S. dollar, and an average price for the Mexican crude oil mix of USD 61.8 per barrel.
The financial outlook assumes that the 28-day Cetes rate will stand at approximately 6.0% at year-end 2027, with an annual average of 6.1%.
From a tax perspective, the package projects a budget deficit of 3.4% of GDP and Public Sector Borrowing Requirements of 3.9% of GDP. Under this background the package includes various proposals intended to strengthen revenue collection and the tax base, including significant changes for businesses regarding deductions, tax losses, interests, payments abroad, tax attributes, tax regimes, and incentives.
Below is an executive summary of the main proposed amendments:
INCOME TAX LAW
1. General mechanism for controlling deductions and tax losses
Control of deductions
The bill introduces a new control mechanism applicable to legal entities resident in Mexico with taxable income exceeding MXN 50 million, limiting both the amount of authorized deductions that may be claimed in each fiscal year and the use of tax losses from prior years.
With respect to deductions, the proposal establishes a differentiated mechanism depending on the proportion that deductions represent relative to taxable income:
- Where authorized deductions are less than or equal to 96.67% of taxable income, the taxpayer may claim only 99% of those deductions.
- Where authorized deductions exceed 96.67% of taxable income, the amount deductible will be limited to an amount equal to 96.67% of taxable income.
Deductions that cannot be claimed as a result of this limitation may be applied over the following 20 fiscal years, in accordance with the rules under the new regime. The explanatory statement notes that this period is intended to recognize the variations a business may experience over time and preserve the recognition of structural deductions within the income tax system.
The deductions referred to in this provision may only be claimed by the taxpayer that generated them and may not be transferred to third parties, including in merger or spin-off transactions.
Tax losses
As a complementary measure, the bill proposes limiting the use of tax losses from prior years to 50% of the taxable profit for the fiscal year. The deduction of tax losses would be limited to the outstanding amount available when that amount is lower than the calculated limit. Any balance that cannot be claimed would remain available for use during the 20 fiscal years following the year in which it was generated.
2027 provisional income tax payments
For legal entities subject to the regime, the bill proposes a transitional mechanism for 2027 provisional payments:
- Factor of 1.0658: where authorized deductions are less than or equal to 96.67% of taxable income.
- Factor of 2.6162: where authorized deductions exceed 96.67% of taxable income.
The bill also provides that, for purposes of these provisional payments, outstanding tax losses may only be offset up to the amount resulting from multiplying by 0.5000 the taxable profit determined for the provisional payment after applying the adjusted profit factor.
2. Additional limitation on the deduction of net interest expense
The bill proposes amending the interest deduction rules by reducing the cap applicable to the deduction of net interest expense for the fiscal year from 30% to 20% of adjusted taxable profit. The amendment retains the structure of the limitation currently provided under the applicable provision but reduces by ten percentage points the parameter used to determine deductible net interest expense.
The explanatory statement links the change to Action 4 of the BEPS project and notes that the international recommendation contemplates a fixed ratio within a range of 10% to 30%. The bill also refers to Japan’s experience and maintains that a 20% limit may serve as a mechanism to encourage more balanced financing structures.
3. Payments abroad
The bill proposes changing the timing for deducting payments abroad for income tax purposes by expressly linking the deduction to the fiscal year in which the consideration is paid and the corresponding withholding tax is remitted.
Accordingly, the bill would introduce a requirement under which such payments may only be deducted in the fiscal year in which the consideration is paid and the corresponding withholding tax is remitted.
With respect to the withholding tax obligation on payments abroad, the bill introduces an accrual concept so that the withholding agent’s obligation would be determined based on when the payment becomes due, accrues, or is paid, whichever occurs first.
For consideration denominated in foreign currency, conversion into Mexican pesos would be made at the time the corresponding tax is withheld.
4. Advance payments for services and leases
The bill proposes changing the timing for deducting advance payments related to services and the temporary use or enjoyment of property. Under the proposal, the deduction would be available only in the fiscal year in which the service is actually rendered or the corresponding period of use or enjoyment of the property elapses.
The explanatory statement notes that, in the case of services and leases, the payment date may not coincide with the time at which the taxpayer actually receives the service or enjoys the property. The measure would neither eliminate nor reduce the right to the deduction; it would only change the timing of its application.
The bill also proposes that the general advance-payment mechanism not apply to advance payments for services or for the temporary use or enjoyment of property.
5. Adjustments to the Net Tax Profit Account (Cuenta de Utilidad Fiscal Neta, or CUFIN)
The bill proposes including among the items deducted from taxable income in determining net tax profit for the fiscal year not only nondeductible items, but also items that fail to satisfy the tax requirements established under the applicable provisions for their deduction.
The explanatory statement maintains that some taxpayers limit the concept of nondeductible items to those listed in Article 28, without deducting other expenditures that fail to meet tax requirements, which may result in an artificial increase in CUFIN.
6. Effects of capitalization of liabilities on the Contributed Capital Account (Cuenta de Capital de Aportación, or CUCA) and the tax basis of shares
The bill proposes specific rules governing the items that may increase the Contributed Capital Account (CUCA), particularly in cases involving the capitalization of liabilities or contributions in kind through accounts receivable, collection rights, or negotiable instruments. For these purposes, capitalized liabilities would not be treated as contributions that increase CUCA to the extent they correspond to:
- Accrued but unpaid interest.
- VAT related to those liabilities.
Likewise, contributions in kind consisting of accounts receivable, assignments of collection rights, or negotiable instruments would be added to CUCA only when realized and only up to the amount actually collected in cash.
Finally, the bill clarifies that items related to capital reductions will reduce CUCA when the reimbursement is paid or when the capital reduction is carried out, as applicable, and expressly includes the absorption of losses.
Separately, the bill proposes modifying the determination of the average tax basis per share to provide that accrued but unpaid interest and VAT related to capitalized liabilities will likewise not form part of the documented acquisition cost of the shares.
7. Elimination of the Optional Tax Regime for Corporate Groups
The bill proposes eliminating the Optional Tax Regime for Corporate Groups by fully repealing Chapter VI of Title II of the Income Tax Law.
Termination of the regime and deferred income tax:
- Termination of corporate groups effective January 1, 2027.
- Calculation and payment of deferred tax and tax that could be deferred under the regime no later than December 31, 2027.
- For tax corresponding to the third immediately preceding fiscal year, payment no later than March 31, 2027.
The explanatory statement notes that the most recent authorizations were granted in 2016 and that the regime would have fulfilled the purpose for which it was established.
8. Simplified Trust Regime (Régimen Simplificado de Confianza, or RESICO)
The bill proposes expanding access to and the benefits of RESICO for both individuals and legal entities by increasing the income thresholds, introducing rules that allow taxpayers to re-enter the regime, and, for legal entities, increasing investment deduction percentages.
Individuals
- Annual income threshold: would increase from MXN 3.5 million to MXN 5 million.
- Maximum rate under the monthly rate table: 2.5% for the new threshold.
- If MXN 5 million is exceeded, the taxpayer would exit the regime beginning in the following month; prior payments under RESICO would be final.
- The taxpayer could return to the regime beginning in the following fiscal year if it is current with its tax obligations and does not exceed MXN 5 million in income.
- Primary sector: the maximum amount of exempt income would increase from MXN 900,000 to MXN 1 million.
Legal entities
- Taxable income threshold: would increase from MXN 35 million to MXN 50 million.
- The regime would change from mandatory to optional for taxpayers that meet the requirements.
- Re-entry would be permitted where the income threshold is met, the taxpayer is current with its tax obligations, and all other requirements are satisfied.
Increase in the maximum investment deduction rates for legal entities under RESICO:
- Deferred charges: from 5% to 10%.
- Pre-operating expenditures: from 10% to 20%.
- Royalties, technical assistance, and other deferred expenses: from 15% to 30%.
- Office furniture and equipment: from 25% to 50%.
- Automobiles and certain transportation equipment: from 25% to 50%.
- Computers, servers, and certain IT equipment: from 50% to 100%.
- Dies, stamping dies, molds, matrices, and tooling: from 50% to 100%.
Legal entities that elect to cease paying tax under RESICO would transition to the General Regime under Title II beginning in the immediately following fiscal year and would apply the mechanism under Article 214 to determine the profit factor.
FEDERAL REVENUE LAW (Ley de Ingresos de la Federación, or LIF) AND TAX INCENTIVES
The 2027 Federal Revenue Law bill combines the continuation of measures introduced for 2026 with changes to certain annual parameters and new tax incentives. For purposes of this analysis, we highlight only those continuing provisions that are relevant to businesses and the substantive changes identified relative to the enacted 2026 Federal Revenue Law.
Provisions proposed to remain in effect include income tax and value-added tax (Impuesto al Valor Agregado, or IVA) withholdings applicable to digital platforms, withholding obligations for crowdfunding institutions, the limited deduction of contributions to the Institute for the Protection of Bank Savings (Instituto para la Protección al Ahorro Bancario, or IPAB), and nondeductible IVA for insurance companies on in-kind indemnity payments made through third parties.
In addition, the surcharge rates applicable to taxpayers with outstanding tax liabilities remain unchanged:
- Monthly rate on unpaid balances: 1.38%.
- Monthly rate for installment payments of up to 12 months: 1.42%.
- Monthly rate for installment payments of more than 12 and up to 24 months: 1.63%.
- Monthly rate for installment payments exceeding 24 months: 1.97%.
Annual withholding tax on interest
For 2027, the bill proposes reducing the annual income tax withholding rate applicable to principal that gives rise to interest payments by financial system institutions from 0.90% to 0.68%.
VAT for RESICO taxpayers
For 2027, the bill introduces a simplified option under which certain RESICO taxpayers may calculate IVA by applying a 7% rate to taxable transactions or activities for which consideration has actually been collected, in lieu of the general IVA mechanism. Under this option, taxpayers would not be permitted to credit IVA charged to them or IVA paid on imports.
Sector-specific incentives
The Federal Revenue Law provides for the continuation of eight specific tax incentives, including benefits related to diesel, biodiesel, and their blends used in certain activities and transportation.
The incentive for use of the National Toll Highway Network would continue, allowing a credit of up to 50% of the related expenses. For 2027, the bill proposes reducing the income threshold for accessing the benefit from MXN 300 million to MXN 250 million.
For 2027, the bill proposes modifying the benefit applicable to taxpayers whose income from the sale of books, newspapers, and magazines represents at least 90% of their total income for the immediately preceding fiscal year. The bill would permit the 0% IVA rate to apply to those sales.
Initial public offerings of shares
The 2027 Federal Revenue Law bill introduces a tax incentive for gains derived from the sale of shares in connection with an initial public offering by a Mexican company, featuring a preferential 10% rate and specific requirements.
Key proposed rules include a requirement that the issuer’s market value not exceed MXN 50 billion. If that amount is exceeded, the incentive would apply proportionally under the mechanism set out in the bill. The proposal also includes rules governing effective placement and simultaneous offerings in Mexico and recognized foreign markets.
Tax regularization program
The bill proposes continuing the tax regularization program during 2027. It would eliminate the exclusion applicable to taxpayers that received benefits under the 2025 and 2026 programs and set the maximum income threshold at MXN 300 million.
Among other cases, the program provides for a 100% incentive on fines, surcharges, and enforcement expenses for certain liabilities from 2025 or earlier, subject to applicable requirements. For certain final tax assessments, the corresponding application would need to be filed no later than October 31, 2027. The program also provides for a 90% incentive for certain fines related to obligations other than payment obligations.
Repatriation of capital
The bill proposes a temporary regime for individuals and legal entities resident in Mexico, as well as nonresidents with a permanent establishment in Mexico, that hold funds of lawful origin abroad as of September 8, 2026.
The option would allow income tax to be paid at a 7.5% rate, without any deductions, on funds repatriated or brought into Mexico. The funds would have to be returned to Mexico no later than December 31, 2027, and remain invested in Mexico for at least three years from the investment date.
For funds brought into Mexico during the first half of 2027, the investment would have to be made no later than December 31, 2027; for funds repatriated during the second half of 2027, no later than June 30, 2028.
Permitted investment uses:
- New fixed assets used in Plan México projects, Development Hubs, or the taxpayer’s activities.
- Land and buildings located in Mexico.
- Research, training, innovation, and technological development.
- Certain liabilities payable to the Federal Government, taxes or government charges, and certain wage and salary payments.
- Government debt securities.
- Investments in specific sectors identified in the bill.
Security codes for nicotine-containing products
The bill proposes requiring manufacturers, producers, and importers of nicotine-containing products to print a security code on each pack, case, package, wrapper, or other container holding such products, except for products used as nicotine replacements.
The bill also proposes expanding the powers of the Mexican Tax Administration Service (Servicio de Administración Tributaria, or SAT) to seize nicotine-containing products.
Excise Tax (Impuesto Especial sobre Producción y Servicios, or IEPS) payment and filing obligations for fuel distributors and marketers
The bill proposes a new obligation for persons other than manufacturers, producers, and importers that sell automotive fuels and fossil fuels. Such persons would calculate IEPS by applying the tax rates established in Article 2 of the IEPS Law to a net base equal to units of measure sold less units acquired during the same month. Volumetric controls would be required to reconcile with the tax calculations, and the tax authorities would be empowered to review the determination.
The bill proposes that IEPS be calculated and paid monthly and reiterates that taxpayers subject to this provision would not expressly or separately charge any amount related to IEPS to their customers.
The measures described in this document are proposals included in the bills comprising the Economic Package for fiscal year 2027 and therefore remain subject to the corresponding legislative process. This analysis should be updated to reflect any amendments that may be approved by the Mexican Congress and published in the Official Gazette of the Federation.
As always, KPMG's Tax and Legal Practice professionals in Mexico are at your disposal to analyze in detail the effects that the application of the above provisions may have on your company.
