Mexico tightens the tax screws: Haunting new indirect tax reforms proposed for 2026

As Mexico positions itself for the next fiscal year, the government’s 2026 economic package, submitted to Congress in September 2025, has sparked significant discussion across the business community. The package includes a series of indirect tax reforms that could reshape how companies manage VAT, excise tax (IEPS) and customs compliance.

For global and domestic businesses alike, these proposals signal that Mexico is doubling down on digital platform regulation, excise tax expansion and customs enforcement as part of a broader effort to modernise tax administration and close revenue gaps.

Digital platforms face stricter VAT and income tax withholding

Under the proposed reforms, digital marketplaces facilitating sales of goods or services in Mexico will be subject to far stricter VAT and income tax (IT) withholding rules.

• When sellers are registered with Mexico’s Federal Taxpayer Registry (RFC), platforms would be required to withhold 50 % of VAT and 4 % of income tax on sales.

• If the seller does not provide a valid RFC, withholding rises to 100% of VAT and 20% of income tax, a clear move to deter informal trading and strengthen compliance visibility.

• Importantly, platforms must issue a Comprobante Fiscal Digital por Internet (CFDI), the official electronic invoice or digital tax receipt, for all transactions and report seller activity to the tax authorities.

These rules would apply even when platforms do not directly process payments, meaning reporting obligations will extend across a broader range of intermediaries than before.

For global platforms such as e-commerce marketplaces, ride-hailing companies and subscription services, these reforms represent a continuation, and intensification, of Mexico’s long-running effort to ensure digital economy players collect and remit VAT locally.

IEPS increase: gaming, betting and digital entertainment in the spotlight

Another standout measure is a proposed rise in excise tax (IEPS) on betting and sweepstakes, increasing from 30 % to 50 %. The measure would apply to both resident and non-resident operators, covering online gaming, casinos and similar activities.

For companies in the entertainment and leisure sectors, this represents not just a cost increase but also a compliance challenge. Operators will need to adapt pricing models, update invoicing and ensure withholding mechanisms are correctly applied under the new rate.

While the government justifies the change as a social and health measure, critics have already raised concerns that the increase may drive informal gaming activity outside regulated channels.

VAT refunds and mergers: Supreme Court reinforces procedural rigour

Mexico’s supreme court (SCJN) recently issued two rulings with implications for VAT compliance and corporate restructuring:

• The court confirmed that taxpayers who miss the legal deadlines to challenge a denied VAT refund lose their right to resubmit, effectively finalising the denial.

• It also upheld the right of the Tax Administration Service (SAT) to block deregistration of a merged entity if either company involved is flagged for simulated transactions.

The message is clear: procedural precision is now as critical as technical accuracy in Mexican indirect tax. Businesses must ensure that VAT refund claims are documented and submitted correctly the first time.

What businesses should do now

If passed, the proposed changes will take effect from 1st January 2026, leaving only a few months for affected businesses to prepare. Practical next steps include:

1. Review platform obligations – assess whether your business qualifies as a digital intermediary under the expanded VAT rules and evaluate the reporting and CFDI issuance requirements.

2. Model financial impact – estimate the effect of higher IEPS and withholding rates on cash flow and profitability.

3. Enhance procedural controls – ensure all VAT refund and merger documentation meets the new legal standards.

4. Re-evaluate customs compliance – conduct internal audits to verify import declarations and duty calculations.

A sign of what’s to come

Mexico’s 2026 proposals underscore a global trend: governments are increasingly turning to digitalisation, transparency and enforcement to secure indirect tax revenues. For businesses operating in or trading with Mexico, proactive planning and early system alignment will be essential to stay compliant and competitive in the year ahead.