Publication
Mexico Submits 2027 Economic Package: Key Tax, Fiscal, and Regulatory Reforms
By Manuel Rajunov and Alonso Sandoval
I. EXECUTIVE SUMMARY
On September 8, 2026, the President of Mexico submitted to the Chamber of Deputies the Economic Package for Fiscal Year 2027 (Paquete Económico 2027). The package includes sweeping proposed amendments to the Income Tax Law (LISR), Federation Revenue Law, Customs Law, Federal Duties Law, and new legislation addressing the digital economy and cadastral modernization. This alert summarizes the key proposals and their potential implications for businesses operating in or with exposure to Mexico.
II. MACROECONOMIC OUTLOOK AND FISCAL POSITION
The 2027 package projects GDP growth below the prior estimate, broadly aligned with Banxico and IMF consensus forecasts.
| Indicator | 2027 Assumption |
| GDP Growth | 1.5%-2.5% (down from 1.9%-2.9%; Banxico/IMF consensus ≈ 1.8%-1.9%) |
| Inflation | 3.0% |
| Exchange Rate | MXN $17.9/USD |
| Reference Interest Rate | 6.0% |
| Oil Price Assumption | USD $61.8/barrel |
Fiscal Outlook
| Metric | Figure |
| Fiscal Deficit | 3.9% of GDP (missing original 3.5% target) |
| Public Debt (SHRFSP) | 55% of GDP (≈ MXN $21.7 trillion) |
| Pemex Government Support | MXN $81.1 billion (down 69.2% from prior levels) |
| Sovereign Credit Ratings | Moody’s Baa3 (stable); Fitch BBB- (stable); S&P BBB (negative outlook) |
III. INCOME TAX LAW (LISR) — KEY REFORMS
A. New Deduction and Loss Limitation Mechanism (Articles 78-A to 78-F)
The centerpiece of the 2027 reform is a new Chapter X added to Title II of the LISR, which introduces a deduction and loss limitation mechanism applicable to Mexican resident legal entities with accruable income exceeding MXN 50 million that report taxable profit.
| Scenario | Deduction Limit |
| Authorized deductions ≤ 96.67% of accruable income | Deductions × 0.9900 (a 1% reduction) |
| Authorized deductions > 96.67% of accruable income | Accruable income × 0.9667 |
- Excess deductions may be carried forward for up to 20 fiscal years. The right is personal and non-transferable — it cannot be transmitted via merger or spin-off (escisión). Amounts may be inflation-adjusted per the Chapter X methodology.
- Net operating loss (NOL) offset is capped at 50% of taxable profit for the year, after applying the deduction cap. Remaining NOLs may carry forward for 20 years. The general 10-year rule under Article 57 LISR is not modified.
- Employee profit-sharing (PTU) is calculated without these new limits — important for labor cost planning.
- Exclusions: coordinados, agricultural sector (AGAPES), maquiladora operations (except income from domestic sales of goods), bankrupt companies, insurance institutions, entities with fewer than 5 years of RFC registration, and entities currently applying immediate depreciation benefits.
- This measure will significantly impact low-margin industries (e.g., retail, distribution, manufacturing) where deductions naturally approach or exceed the 96.67% threshold. Companies should model the impact on their effective tax rates and cash flow.
B. 2027 Provisional Tax Payment Adjustments (Transitional Provisions)
Transitional provisions introduce adjusted profit coefficients for provisional monthly ISR payments during 2027, applicable to legal entities resident in Mexico with accruable income exceeding MXN 50 million in the most recent annual return.
| Scenario | Coefficient Adjustment |
| Deductions ≤ 96.67% of Income | Coefficient × 1.0658 |
| Deductions > 96.67% of Income | Coefficient × 2.6162 |
- NOLs are limited to 50% of resulting taxable profit for provisional payment purposes.
- Taxpayers should expect significantly higher monthly provisional ISR payments beginning in January 2027, creating immediate cash flow pressure. The 2.6162 factor for high-deduction companies is particularly aggressive.
C. Reduction in Net Interest Deduction Limit
The net interest deduction limit under Article 28, Section XXXII of the LISR is reduced from 30% to 20% of adjusted taxable profit. The statement of reasons justifies the reduction based on the need to combat profit-shifting strategies through interest payments between related and unrelated parties.
- Taxpayers with leveraged financing structures — particularly acquisition finance, infrastructure projects, real estate, and capital-intensive projects — must recalculate the impact on their effective tax burden.
- The reduction could generate a material increase in the ISR tax base for highly leveraged entities.
D. Advance Payments for Services and Leases
Amendments to Articles 25 and 27, Section XVIII of the LISR provide that advance payments for services and temporary use or enjoyment of property are deductible only in the fiscal year the service is actually rendered or the lease period elapses. For multi-year arrangements, only the proportionate part is deductible in each year. This does not eliminate the deduction right — it conditions it on the effective receipt of the consideration.
E. Payments to Foreign Residents
Amendments to Article 27, Section V, and Article 153, fifth paragraph, of the LISR tighten the rules on deductibility of payments to foreign residents.
- Payments to foreign residents are deductible only in the fiscal year the consideration is paid and the corresponding withholding tax is remitted to authorities.
- The withholding obligation arises on the earliest of: (i) the date of enforceability (exigibilidad), (ii) the date of accrual (devengo), or (iii) the date of payment — whichever occurs first. “Accrual” is added as a new triggering event.
- Currency conversion is now pegged to the exchange rate at the time the withholding is made (previously at accrual or payment).
- Foreign groups with Mexican subsidiaries must carefully align intercompany payment timing with withholding remittance to preserve deductibility. Misalignment could result in permanent loss of deductions.
F. CUCA, CUFIN, and Cost Basis of Shares
- CUCA (Capital Contribution Account): In liability capitalizations, accrued but unpaid interest and related VAT are excluded from contributed capital. In-kind contributions consisting of accounts receivable or negotiable instruments are added to CUCA only when they materialize and only up to the amount effectively collected in cash. Loss amortization is now expressly recognized as a concept that reduces CUCA.
- CUFIN (Net Taxable Profit Account): Non-deductible items that must be subtracted are broadened beyond Article 28 to include any expenditure that does not meet general deductibility requirements. This closes an interpretation gap some taxpayers used to artificially inflate CUFIN balances.
- Share cost basis: accrued unpaid interest and related VAT excluded from the acquisition cost of shares.
G. Elimination of the Optional Regime for Groups of Companies
Articles 59–71 of LISR are fully repealed (Chapter VI, Title II). Taxpayers currently under this regime must deconsolidate by January 1, 2027.
| Key Deconsolidation Deadlines • Deferred ISR (updated for inflation), including FY2026: payable no later than December 31, 2027 • Deferred tax from the third immediately prior fiscal year: payable by March 31, 2027 |
Corporate groups that have benefited from tax deferral through the consolidation regime face immediate cash outflows. Groups should begin planning for deconsolidation and liquidity management.
H. Simplified Trust Regime (RESICO) Modifications
The Simplified Trust Regime receives several expansions for both individuals and legal entities.
| Taxpayer | Key Changes |
| Individuals | Income threshold raised from MXN $3.5M to MXN $5M, with a maximum rate of 2.5%. Re-entry is now permitted; the prior restriction based on non-compliance is eliminated. |
| Legal Entities | Income threshold raised from MXN $35M to MXN $50M. The regime becomes optional (previously mandatory for qualifying entities formed exclusively by individuals). Depreciation rates doubled across nearly all categories. |
| Agricultural Sector | ISR exemption raised from MXN $900,000 to MXN $1 million. |
IV. FEDERAL REVENUE LAW 2027
A. Tax Regularization Program
The Federal Revenue Law establishes a tax amnesty for individuals and legal entities with 2025 total income not exceeding MXN $300 million.
| Category | Reduction |
| Firm/consented tax assessments (2025 and prior, SAT or ANAM); amounts owed under audit where irregularities are remedied; outstanding tax credits determined by authorities | 100% reduction of penalties, surcharges, and enforcement costs |
| Penalty-only assessments (non-compliance with non-payment obligations) | 90% reduction |
| Key Dates • Deadline to apply: October 31, 2027 • Payment in full: December 31, 2027 |
- Exclusions: large taxpayers, those linked to criminal tax proceedings, those with final convictions for tax crimes, and those on blacklists under Articles 49 Bis, 69-B, and 69-B Bis of the Federal Tax Code.
B. Capital Repatriation
The law provides a preferential regime for the repatriation of lawfully-sourced funds maintained abroad until September 8, 2026.
- Available to individuals and legal entities resident in Mexico, and foreign residents with a permanent establishment in Mexico.
- Preferential ISR rate of 7.5%, with no deductions.
- Funds must remain invested in Mexico for at least 3 years in eligible destinations, including Plan México projects, new fixed assets, real estate, research and innovation, government bonds, or payment of federal tax liabilities.
- Dividend distributions or capital reimbursements during the 3-year lock-up trigger a 10% withholding.
| Key date • Funds must be repatriated by December 31, 2027 |
C. Other Revenue Measures
The Federal Revenue Law includes a number of additional measures of significance:
| Measure | Detail |
| Simplified 7% VAT for RESICO | RESICO taxpayers may elect a flat 7% VAT on effectively collected gross receipts, with no input VAT crediting. The election is irrevocable for the fiscal year. |
| Financial System Interest Withholding | Annual rate reduced from 0.90% to 0.68%. |
| IPO Stock Market Stimulus | 10% ISR rate on gains from IPO shares of Mexican companies with market value not exceeding MXN $50 billion. For simultaneous dual listings, the stimulus applies to the Mexican-placed portion. |
| 0% VAT on Books, Newspapers, and Magazines | Replaces the prior 8% additional deduction. Applies to taxpayers deriving 90% or more of income from such sales; includes the right to credit input VAT. |
| IEPS Regime for Fuel Resellers | New specific IEPS payment regime for persons other than manufacturers, producers, or importers that sell gasoline and diesel, requiring IEPS payment on inventory shortfalls or inconsistencies. |
| Non-Deductibility of IPAB Fees | Maintains the non-deductibility of three-quarters of the fees paid by commercial banks to IPAB in connection with the FOBAPROA banking bailout. |
| FinTech Withholding Obligations | Collective financing institutions under the FinTech Law must withhold and remit ISR at 20% on nominal interest paid to Mexican residents and VAT at 16% on accrued interest. |
| Digital Intermediation Platform Withholding | The 2.5% ISR withholding rate is maintained for legal entities receiving income through technology platforms. The rate increases to 20% where the entity fails to provide its RFC. |
| Highway Toll Stimulus | Up to 50% of highway toll expenditures may be credited against ISR, with the applicable income threshold reduced from MXN $300 million to MXN $250 million. |
| Fiscal Guarantee Relief for Administrative Appeals | Taxpayers filing a revocation appeal from January 1, 2027 are relieved of posting a fiscal guarantee for 6 months. |
| Verification Program for Nonprofit Entities | SAT will implement a verification and compliance program for nonprofit legal entities. |
V. TAX INCENTIVES — PLAN MÉXICO AND DEVELOPMENT POLES
Plan México
- Incorporated into LISR transitional provisions, replicating the original Plan México Decree.
- Applicable to legal entities under the general regime and RESICO, and individuals with business or professional activities.
- Immediate deduction of investments in new fixed assets acquired January 1, 2027 through September 30, 2030, at preferential rates from 35% to 89% of original investment.
- Additional deduction of 25% of the increase in training or innovation expenses, applicable in annual returns 2027–2030.
- Exclusions: office furniture, internal combustion vehicles, armoring equipment, and assets not individually identifiable. Assets must remain in use for at least 2 years.
- Global cap: 30 billion pesos minus incentives effectively authorized through December 31, 2026.
Economic Development Poles for Well-Being
- 100% immediate deduction on new fixed assets (2027–2030).
- Additional 25% deduction for training and innovation.
Circular Economy Development Poles (PODECIBI)
- 100% tax credit on fees for use, enjoyment, or exploitation of public domain property (for developers).
- Additional 25% deduction for training and innovation linked to circular design (through 2030).
- 100% immediate deduction on new fixed assets used in PODECIBI (2027–2030), with 2-year minimum retention.
Isthmus of Tehuantepec and Yucatán Development Poles
- 100% ISR tax credit for first 3 fiscal years; 50% for following 3 years (up to 90% if minimum employment thresholds exceeded).
- 100% immediate deduction on new fixed assets for 6 years.
- 100% VAT tax credit for 4 years. SHCP must issue guidelines by January 31, 2027.
VI. CUSTOMS LAW REFORMS
The proposed amendments to the Customs Law focus on combating undervaluation of imported goods, which the Executive states affects tax collection, distorts markets, and disadvantages domestic producers — particularly in the textiles, apparel, and footwear sectors.
- Expanded customs authority powers: authorities must initiate ex officio audit proceedings when declared value is below transaction value of identical or similar goods — no minimum percentage threshold required.
- Precautionary seizure: the existing 50% value discrepancy threshold is eliminated. Seizure is now available whenever declared value is below the legally determined value.
- New seizure substitution mechanism: for discrepancies below 20%, cash deposit or customs guarantee account accepted; for discrepancies of 20% or more, only cash deposit accepted.
- Customs guarantee accounts: the prior benefit of preventing precautionary seizure is eliminated.
- Reduced infraction threshold: from 50% to 20% for goods under deferred or exempt duty regimes.
VII. FEDERAL DUTIES LAW
- 16% increase in National Securities Registry (RNV) fees (inscription and maintenance) to address a 10-year accumulated lag.
- Telecommunications and spectrum: new authorizations for experimental and temporary spectrum use with specified fees; 12% reduction in fees for certain bands (2.5 GHz, 1.9 GHz, 1.7/2.1 GHz, among others); up to 100% discount subject to coverage obligations.
- Railway: fee increased from 1.25% to 3.00% on gross income from public-domain railway property for operators with 15+ years.
- Air navigation: fees increased by 10%.
VIII. NEW LEGISLATION
A. Digital Economy Law for Digital and Electronic Payments
- New law to promote electronic and digital payment adoption.
- Recognizes Digital CURP and Digital Citizen File (Expediente Digital Ciudadano) as identification mechanisms.
- SHCP will determine sectors where digital payments will be the only permitted form of payment.
B. General Law for Cadastral and Registry Strengthening and Harmonization
- Establishes coordination bases among the Federation, states, and municipalities to modernize, harmonize, and interoperate land registries and public property registries.
- Creates the National Cadastral Plan, National Registry Plan, Unique Cadastral Key for each property, and national digital platforms for digital processing.
IX. 2027 BUDGET HIGHLIGHTS
| Item | Figure |
| Total Revenues | MXN $9.16 trillion (+3.9% real) |
| Total Expenditure | MXN $10.51 trillion (+0.7% real) |
| Committed to Pensions, Debt Service, Federal Transfers | ≈ 80% of the budget |
| Physical Investment | MXN $1.03 trillion (2.6% of GDP; below OECD average of 3.5%) |
| Security Spending | +16.7% |
| Health Spending | +10.7% |
| Education Spending | +7.4% |
| Mining / Manufacturing / Construction | −45.7% |
| Fuels / Energy | −18.4% |
| Pemex Share of Physical Investment | 25% (largest recipient) |
About Snell & Wilmer
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