Mexico: Presidential decree grants excise tax credit on violent-content video games

The Mexican president on December 23, 2025, announced during a press conference that the 8% excise tax (IEPS) on violent-content video games would not be collected, despite the law having already been approved as part of the tax reform published in the official gazette on November 7, 2025.

The reform had introduced new rules tightening value added tax (VAT), IEPS, income tax (IT), and federal tax code (CFF) provisions applicable to digital platforms (read TaxNewsFlash). The decision not to collect the excise tax appears to stem from the impracticality of collecting such a tax and the lack of clear criteria to determine what content should be subject to taxation.

Following this announcement, on December 31, 2025, the Mexican government published a presidential decree in the official gazette granting a fiscal stimulus (credit) equivalent to 100% of the excise tax applicable to the sale and provision of services of video games with violent, extreme, or adult content, not suitable for minors under 18 years of age. This measure responds to industry concerns regarding the practical challenges of implementation and the absence of clear classification criteria.

Key provisions and implications of the decree

• Scope of the fiscal stimulus: The decree grants a fiscal stimulus equivalent to 100% of the excise tax generated from the sale and provision of services of video games with violent, extreme, or adult content, not suitable for minors under 18 years of age. The stimulus applies to both physical sales to end customers and digital services, including those provided by foreign residents without a permanent establishment in Mexico.
• Neutralization of the tax burden: The fiscal stimulus eliminates the obligation to pay excise tax for taxpayers engaged in these activities, provided that the tax is not passed on to the purchaser. The benefit only applies if the tax is not charged to the end consumer. The stimulus is creditable against the excise tax generated from these activities but does not give rise to refunds or compensation.
• Exemption from formal obligations: Taxpayers applying the fiscal stimulus are relieved from certain formal obligations established in the excise tax law, such as filing notices, registration with the Mexican tax authority, and compliance with informational requirements related to these operations. Taxpayers providing access to or downloads of these video games via digital services, including intermediary platforms, are also exempt from the tax obligations established in Articles 5o.-A BIS and 20-A of the excise tax law, solely with respect to this tax. This means they will not be subject to temporary blocking of digital service access due to noncompliance with these obligations.
• No impact on VAT obligations: The decree does not modify or exempt obligations related to VAT arising from the provision of digital services. Taxpayers must continue to comply with applicable VAT regulations.
• Not taxable for income tax purposes: The fiscal stimulus provided by the decree is not considered taxable income for income tax purposes.
• SAT authority to issue additional rules: The Mexican tax authority (SAT) is authorized to issue general rules to ensure the proper application of the fiscal stimulus and other provisions of the decree. Taxpayers are advised to monitor future publications and administrative rules.
• Effective date: The decree came into effect on January 1, 2026.

KPMG observations

• The decree provides immediate relief to companies that market or provide services related to video games that could potentially be classified as violent, extreme, or adult content, effectively removing the excise tax burden and simplifying compliance with formal obligations, considering that no clear rules were ever published to determine which video games would be subject to this tax.
• It is essential for taxpayers to confirm that the tax is not passed on to the purchaser in order to apply the fiscal stimulus.
• Ongoing monitoring of SAT publications and additional rules is needed to comply.
• VAT obligations remain in effect and must be fulfilled in accordance with the law.

Read a January 2026 report (Spanish) prepared by the KPMG member firm in Mexico

For more information, contact a KPMG tax professional:

Antonio Zuazua | azuazua@kpmg.com.mx