The reforms aim to enhance compliance, curb tax avoidance schemes, and modernise the e-invoicing and digital platform tax frameworks.
Mexico’s government has published a series of decrees introducing the 2026 Federal Revenue Law and extensive reforms to the Federal Tax Code, Special Tax on Production and Services (IEPS), and digital platform taxation.
The measures, announced on 7 November 2025, include new fiscal rules, tax compliance provisions, and e-invoicing obligations aimed at strengthening revenue collection and curbing tax evasion.
Decree issuing the Federal Revenue Law for the Fiscal Year 2026
The Federal Revenue Law for Fiscal Year 2026 outlines Mexico’s projected federal income at 5.34 trillion pesos and sets detailed rules for public finance management. It addresses the use of stabilisation funds, budgetary balance calculations—excluding certain public investments from GDP—and establishes transitional reporting requirements for government bodies on revenue, expenditure, and compliance.
The law also provides tax credits and incentives for sectors such as transportation and agriculture, alongside provisions on penalties, debt forgiveness, and administrative facilities.
Decree amending, adding, and repealing various provisions of the Federal Tax Code
A second decree reforms the Federal Tax Code (Reforma al Código Fiscal de la Federación 2025), introducing stricter enforcement mechanisms to tackle tax evasion, false digital invoices (CFDIs), and illegal foreign trade.
Key changes include the suspension of CFDI issuance, new grounds for cancelling Federal Taxpayer Registry (RFC) entries, and criminal sanctions for using or publishing false tax receipts. The decree takes effect on 1 January 2026, with digital services provisions applying from 1 April 2026.
The government also updated the IEPS, targeting tobacco, sugary beverages, video games, and gambling. Cigarettes and nicotine products will face higher rates, while sugary drinks and artificial sweeteners are subject to revised quotas.
Video games with violent or adult content will incur an 8% tax, with rules for foreign digital providers. The reforms also cover online gambling and raffles, particularly involving foreign residents.
Most measures become effective on 1 January 2026, with some cigarette taxes phased in through 2030.
The digital platform tax reforms expand withholding obligations to transactions by Mexican legal entities (B2B). Platforms must withhold 50% VAT and 2.5% Income Tax when sellers provide an RFC, or 100% VAT and 20% IT if they do not.
Full VAT withholding also applies to sales by nonresidents or when payments are deposited into foreign accounts, even if sellers are Mexican. Platforms are required to issue e-invoices for all withheld amounts and report information for all sellers, including nonresidents and offshore settlements. The Income Tax withholding for Mexican individuals on these platforms rises from 1% to 2.5%.
The reforms aim to enhance compliance, curb tax avoidance schemes, and modernise the e-invoicing and digital platform tax frameworks.
