Key Proposals of the 2026 Mexican Tax Reform
On September 8, the Persident of Mexico submitted to Congress the Economic Package for fiscal year 2026 (the “Tax Bill”). This Tax Bill includes a series of reforms that, if approved, will impact the business environment in Mexico starting January 1, 2026.
We have prepared an executive summary of the most relevant proposals so you can anticipate their effects and make informed decisions.
Main Proposals of the 2026 Tax Bill
- New Excise Taxes and Adjustments to Existing Ones (IEPS)
The Tax Bill proposes significant changes to the Excise Tax on Production and Services (IEPS) with a focus on public health and revenue collection:
- Video Games: A new 50% tax on violent or adult-rated video games (categories C and D). This would apply to downloads, online services, and platforms.
- Tobacco and Sugary Beverages: Updates and increases to the IEPS rates applicable to these products, continuing the “health-related taxes” policy. The aim is to discourage consumption while strengthening tax revenue.
Practical impact: Companies in these sectors will face a higher tax burden, which surely will be passed on to final consumers.
- Increased Oversight of Digital Platforms and Online Sellers
The digital economy draws spetial attention from the tax authorities, with two major measures:
- Real-Time Access: Digital intermediation platforms would be required to provide the Mexican Tax Authority (SAT) with real-time access to their transaction records.
- New Withholding Structures: Adjustments to VAT and income tax (ISR) withholdings for sellers on platforms:
- Sellers with Tax Identification Code (“RFC”): 50% VAT and 4% ISR withholding.
- Sellers without RFC: 100% VAT and 20% ISR withholding.
Practical impact: Increased tax enforcement and cash-flow pressure for sellers. Platforms will take on greater responsibilities as withholding agents. Sellers must ensure compliance to avoid higher withholdings.
- Strengthening SAT’s Auditing Powers and Stricter Penalties
The tax authority seeks to expand its enforcement tools and toughen penalties for non-compliance:
- Technological On-site Audits: SAT would expand its use of technological tools during on-site audits and for the verification of tax invoices.
- Combatting Smuggling and Fraud: Stricter sanctions are proposed for smuggling, simulated transactions, and the use of false invoices.
Practical impact: Companies should prepare for more agile, technology-driven audits. Strengthening internal controls will be critical to avoid severe penalties.
- Incentive for Repatriation of Capital
The Tax Bill proposes a temporary capital repatriation program to encourage investment in Mexico as part of the nearshoring trend and under the “Plan Mexico,” initiative:
- Preferential Rate: A flat 15% ISR rate would apply to funds held abroad that are brought back to Mexico.
- Conditions: Repatriated capital must be invested in productive activities in Mexico for at least three years.
Practical impact: An opportunity to regularize foreign-held capital with a tax benefit, provided that mid-term investment requirements are met.
- Changes in Income Tax (ISR) and Administrative Simplification
- Withholding on Interest: The annual ISR withholding rate on interest paid by the financial system would increase from 0.50% (2025) to 0.90% in 2026.
- Simplified Regime for Individuals (RESICO): Taxpayers under this regime would be exempt from filing the annual tax return.
- CFDI Cancellation: The deadline to cancel tax invoices would be extended, allowing cancellations up to the month in which the annual tax return for the fiscal year is due.
Practical impact: Higher tax costs for savers and investors. On the other hand, meaningful administrative relief for small taxpayers and greater flexibility to correct invoicing errors.
What’s Next and How to Prepare?
- Legislative Discussion: These proposals will be analyzed, debated, and possibly modified by Congress in the coming weeks. We will closely monitor the process and keep you informed on the final approved version.
- Impact Assessment: We invite you to contact us for a personalized assessment to evaluate how these proposals may specifically affect your operations and to discuss on an appropriate action plan.
- Preventive Action: Anticipating these changes allows businesses to adjust models, optimize tax burdens, and ensure smooth compliance for 2026.
For any questions or additional assistance, please do not hesitate to contact the professionals at Cuesta Campos.
Contact
Héctor Avilés
THE ABOVE IS PROVIDED AS GENERAL INFORMATION PREPARED BY PROFESSIONALS REGARDING THE REFERENCED TOPIC. THIS DOCUMENT ONLY REFERS TO LAWS APPLICABLE IN MEXICO. WHILE EVERY EFFORT HAS BEEN MADE TO PROVIDE ACCURATE INFORMATION, WE DO NOT ASSUME ANY RESPONSIBILITY FOR ERRORS OR OMISSIONS. THIS DOCUMENT DOES NOT CONSTITUTE LEGAL, ACCOUNTING, OR PROFESSIONAL ADVICE OF ANY KIND.
