Mexico: Proposed tax measures in 2027 Economic Package

Mexico’s Executive on September 8, 2026, submitted to the Parliament (Congress) the 2027 Economic Package, which includes the following tax proposals:

• Control of deductions: A new control mechanism would apply to Mexican resident legal entities with taxable income exceeding MXN$50 million. When authorized deductions are less than or equal to 96.67% of taxable income, taxpayers could only claim 99% of those deductions. When authorized deductions exceed 96.67% of taxable income, deductions would be limited to 96.67% of taxable income. Unused deductions could be applied over the following 20 tax years.
• Tax losses: The use of prior-year tax losses would be limited to 50% of the taxable profit for the tax year, with unused balances available for the following 20 tax years.
• Provisional payments: Transitional factors of 1.0658 or 2.6162 would apply to 2027 provisional payments depending on the deduction-to-income ratio.
• Net interest expense: The deduction cap for net interest expense would be reduced from 30% to 20% of adjusted taxable profit.
• Payments abroad: Deductions would only be permitted in the tax year in which the consideration is paid and withholding tax is remitted. Withholding obligations would accrue when the payment becomes due, accrues, or is paid, whichever occurs first.
• Advance payments: Deductions for service and lease advances would only be allowed in the tax year in which the service is actually rendered or the period of use elapses.
• Net tax profit account (CUFIN): Taxpayers would be required to subtract expenditures failing to satisfy tax requirements from taxable income to determine net tax profit.
• Contributed capital account (CUCA): Capitalized liabilities for unpaid interest and VAT would not increase CUCA or the tax basis of shares. Contributions in kind of receivables would only increase CUCA when actually collected in cash.
• Optional corporate group regime: The optional tax regime for corporate groups would be fully repealed, with termination becoming effective on January 1, 2027, and deferred taxes payable during 2027.
• Simplified trust regime (RESICO): Income thresholds would increase to MXN$5 million for individuals and MXN$50 million for legal entities, making the regime optional for corporations and increasing maximum investment deduction rates.
• Withholding tax on interest: The annual income tax withholding rate on financial system interest would be reduced from 0.90% to 0.68%.
• RESICO VAT option: Eligible RESICO taxpayers could calculate VAT by applying a simplified 7% rate on collected transactions, with no credit allowed for VAT paid.
• Sector-specific incentives: Eight specific tax incentives would continue, with the toll highway credit threshold reduced to MXN$250 million, and a 0% VAT rate would apply to books, newspapers, and magazines for eligible publishers.
• Initial public offerings: A preferential 10% tax rate would apply to gains from initial public offerings of Mexican company shares, provided the market value of the issuer does not exceed MXN$50 billion.
• Tax regularization program: The program would continue in 2027 for taxpayers with income up to MXN$300 million, offering a 100% incentive on fines and surcharges for certain pre-2026 liabilities.
• Capital repatriation: A temporary regime would apply a preferential 7.5% rate on foreign funds held as of September 8, 2026, if returned to Mexico by December 31, 2027, and invested for three years.
• Excise tax (IEPS) on fuel: Fuel distributors and marketers would calculate monthly IEPS on net units sold (units sold less units acquired) and would not charge IEPS separately to customers.

Read a September 2026 report prepared by the KPMG member firm in Mexico