On September 8, 2026, the Executive Branch submitted to the Chamber of Deputies a bill to amend, supplement and repeal various provisions of the Mexican Income Tax Law (LISR), as part of the 2027 Economic Package.
The bill proposes significant changes for businesses, including new limits on allowable deductions and tax loss carryforwards, changes to provisional tax payments, a lower cap on net interest deductions, and new requirements relating to payments to foreign residents, advance payments and certain corporate transactions.
As these measures are currently proposed in a bill, they are not yet in force and may change during the legislative process. If enacted as proposed, most provisions would take effect on January 1, 2027.
1. New cap on deductions for companies with income exceeding MXN 50 million.
One of the most significant changes is a new mechanism to limit allowable deductions for Mexican resident legal entities with taxable income exceeding MXN 50 million that report a tax profit.
The bill contemplates two scenarios:
- Where deductions are equal to or less than 96.67% of taxable income, up to 99% of those deductions could be claimed in the tax year.
- Where deductions exceed 96.67% of income, the maximum deductible amount would be capped at 96.67% of income.
Deductions that cannot be claimed because of these limits would not automatically be forfeited. The bill proposes allowing the unused balance to be carried forward for the following 20 tax years.
2. Tax losses would also be subject to a new cap.
The bill also proposes restricting the amount of prior-year tax losses that may be utilized each year.
The offset would be capped at 50% of the tax profit for the year, after applying the deduction cap described above.
Accordingly, available tax loss carryforwards would no longer necessarily allow companies to offset all tax profit generated in a given year. A portion of those losses would have to be carried forward to subsequent years.
3. Impact on 2027 provisional tax payments.
The bill seeks to reflect the effects of the new mechanism in monthly provisional tax payments, as well as in the annual tax return.
For the 2027 tax year, companies with income exceeding MXN 50 million would have to adjust the profit coefficient used to calculate their provisional tax payments.
- Where deductions reported in the most recent annual tax return are equal to or less than 96.67% of taxable income, the profit coefficient would be multiplied by 1.0658.
- Where deductions exceed that percentage, the coefficient would be multiplied by a factor of 2.6162.
In addition, tax losses used to calculate provisional tax payments would be subject to a cap of 50% of the corresponding tax profit.
4. Lower cap on net interest deductions.
The bill proposes reducing the cap used to determine the deductibility of certain net interest expenses from 30% to 20% of adjusted tax profit.
If enacted, this change could increase nondeductible interest expenses for companies with substantial financing, particularly those whose operations rely heavily on debt from related parties or third parties.
5. New rules for deducting payments to foreign residents.
The bill also proposes changes to the treatment of certain payments to foreign residents.
The deduction would be available in the tax year in which the consideration is paid and the corresponding income tax withholding is remitted. The withholding obligation would arise when the amount becomes due, accrues or is paid, whichever occurs first.
6. Advance payments for services and leases.
The bill proposes changes to the treatment of advance payments for services and the temporary use or enjoyment of property.
In these cases, an advance payment would no longer be sufficient to claim a deduction. The deduction would become available as the service is actually rendered or as the relevant period of use or enjoyment of the property elapses.
Where a transaction spans more than one tax year, the deduction would be recognized in proportion to the amount attributable to each period.
7. Adjustments to CUFIN and CUCA.
The bill also includes significant changes to the Net Tax Profit Account (CUFIN) and the Capital Contribution Account (CUCA), both of which are relevant to transactions such as dividend distributions, capital contributions and capital reductions.
For CUFIN purposes, the bill proposes taking into account, when determining net tax profit, expenditures that do not meet the tax requirements for deductibility.
For CUCA purposes, certain items arising from the capitalization of liabilities, including accrued but unpaid interest and VAT, would not increase the account balance.
Similarly, contributions made through accounts receivable, assignments of collection rights or negotiable instruments would be recognized for CUCA purposes only when the relevant amounts are actually collected.
8. Changes to the Simplified Trust Regime.
The bill proposes expanding the scope of the Simplified Trust Regime (RESICO).
For individuals engaged in business or professional activities, or granting the temporary use or enjoyment of property, the annual income threshold for eligibility would increase from MXN 3.5 million to MXN 5 million.
For legal entities, the threshold would increase from MXN 35 million to MXN 50 million. The bill also proposes making the regime optional for eligible legal entities, rather than mandatory.
The bill would also allow certain taxpayers that have ceased to be taxed under RESICO to reenter the regime, provided they meet the income threshold and other applicable conditions.
9. Repeal of the optional regime for corporate groups.
Finally, the bill proposes repealing the Optional Regime for Corporate Groups.
Groups currently taxed under this regime would have to apply the transitional rules governing their exit from the regime and the payment of outstanding deferred income tax.
Companies subject to this regime should identify their deferred tax amounts in advance and assess the potential financial impact of its repeal.
10. What should companies review?
Although the bill may still change during the legislative process, potentially affected companies can begin assessing the following matters in advance:
- Quantify the impact of the new deduction cap, particularly where deductions represent a high percentage of taxable income.
- Identify available tax loss carryforwards and model the impact of limiting their use to 50% of tax profit.
- Project 2027 provisional tax payments, taking into account the proposed adjustment factors and their potential cash flow impact.
- Review financing structures to determine the potential impact of reducing the net interest deduction cap from 30% to 20%.
- Identify significant payments to foreign residents and advance payments, reviewing accrual, due and payment dates, tax withholdings and when services are actually rendered.
- Analyze planned corporate transactions, particularly the capitalization of liabilities, dividends, capital contributions and capital reductions.
- Assess whether RESICO would be beneficial, where income levels and ownership structure meet the eligibility requirements.
- For groups currently using the optional regime, quantify deferred income tax and assess in advance the implications of its potential repeal.
Our team can assist companies in analyzing the proposed changes, modeling their potential tax and financial effects, and identifying measures to consider ahead of the 2027 tax year.
Contact
Héctor Avilés
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