Mexico’s 2027 Economic Package – Proposed Tax Reform

Monday, September 21, 2026

On Sept. 8, 2026, the Federal Executive Branch submitted to the Mexican Congress the Economic Package for fiscal year 2027 (2027 Economic Package), which includes, among other items, the General Economic Policy Criteria, the proposed Federal Expenditure Budget, and proposed amendments to the Federal Revenue Law (FRL) and the Mexican Income Tax Law (MITL).

The proposals are subject to the legislative process and, therefore, may be modified before approval.

The 2027 Economic Package proposes a policy aimed at strengthening public revenue and maintaining investment momentum without increasing the general corporate income tax rate. It also reflects a strategy to increase tax collection by strengthening and controlling the taxable base, particularly through new limitations applicable to deductions, tax losses, and interest.

With respect to the MITL, the 2027 Economic Package proposes relevant changes to the determination of the taxable base that might increase the effective tax rate and the cash flow allocated to tax payments for certain companies. In addition, the package maintains incentives aimed at promoting productive investment, the relocation of economic activities, and projects linked to Plan Mexico.

This GT Alert summarizes the proposed initiatives for the MITL and FRL.

• Greater control over the taxable base: A new mechanism would limit the application of authorized deductions and tax losses for legal entities with income exceeding MXN$50 million.
• Higher tax cost of financing: The limit for the deduction of net interest would be reduced from 30% to 20% of adjusted taxable income.
• Relevant changes to corporate transactions: Rules related to payments abroad, advance payments, Capital Contribution Account (CUCA), the Net Tax Profit Account (CUFIN), and tax basis in shares would be modified, and the 2027 Economic Package also proposes to eliminate the Optional Regime for Groups of Companie.
• Investment incentives: The 2027 Economic Package proposes to maintain and incorporate incentives related to Plan Mexico, productive investment, training, innovation, and certain development hubs.

One of the most relevant changes includes incorporating a new mechanism applicable to Mexican-resident legal entities with taxable revenues exceeding MXN$50 million that determines taxable profit for the relevant tax year. Exceptions to the mechanism would apply for certain industries.

The initiative proposes limiting authorized deductions based on the proportion they represent in relation to taxable income. That is, when deductions exceed 96.67% of income, the deductible amount would be limited to such percentage. When the amount of deductions is equal to or less than 96.67% of income, up to 99% of the corresponding deductions would be allowed.

Deductions that cannot be used due to this limitation may be applied, as adjusted for inflation, during the following 20 fiscal years, subject to the requirements set forth in the initiative.

In addition, the amortization of tax losses from prior fiscal years would be limited to 50% of taxable income determined after applying the limitation on authorized deductions. Losses that may not be used exclusively due to this restriction might be applied during the 20 fiscal years following the year in which they were generated, subject to this limitation.

The proposal would reduce from 30% to 20% of adjusted taxable income the applicable limit for determining the maximum amount of net interest deductible in the fiscal year. That is, net interest exceeding 20% of adjusted taxable income would not be deductible under the mechanics set forth in the MITL.

The initiative proposes modifying the timing for the deduction of certain payments abroad by linking the deduction to the fiscal year in which the payment is effectively made and the corresponding withholding tax is paid. In turn, the withholding obligation would arise when the payment becomes due, accrues, or is made, whichever occurs first.

With respect to advance payments for services and for the use or temporary enjoyment of property, the deduction would apply when the service is effectively rendered or the corresponding period has elapsed.

The Federal Executive Branch proposed various amendments in connection with the CUCA, CUFIN, and the tax basis in shares.

Among other matters, the 2027 Economic Package would establish rules with respect to the capitalization of liabilities and contributions made through accounts receivable, as well as adjustments related to non-deductible items.

These amendments might have relevant implications for capitalizations, dividend distributions, corporate reorganizations, and M&A transactions.

The elimination of the Optional Regime for Groups of Companies is proposed as of Jan. 1, 2027. Groups currently applying for such regime would be required to exit the regime and pay the deferred income tax, in accordance with the terms and transitional rules established in the initiative.

As part of the policy to promote investment, the proposal would incorporate into the MITL various incentives related to Plan Mexico and certain development hubs, including immediate deduction benefits for investments and additional deductions for training and innovation.

In general terms, these benefits may apply during the 2027–2030 period, subject to compliance with the corresponding requirements.

The proposed FRL for 2027 includes several temporary measures. Some of the most relevant for the business sector include:

• Regularization of tax credits: A benefit is proposed for taxpayers with income of up to MXN$300 million, through the reduction of fines, surcharges, and enforcement expenses related to tax credits for 2025 and prior fiscal years, subject to compliance with specific requirements.
• Return of resources held abroad: A proposed, temporary regime would allow resources of lawful origin held abroad to be returned to Mexico through the payment of income tax at a 7.5% rate, without deductions, provided that, among other requirements, they are invested in Mexico and remain invested in Mexico for a minimum period of three years.
• Securities market: A tax incentive is contemplated for the sale of shares through initial public offerings (IPOs) of Mexican companies whose value do not exceed MXN$50 billion. For such purposes, shareholders selling shares in the IPO would pay 10% on the gain obtained from the sale, provided that the transaction is carried out through an authorized stock exchange and complies with the additional requirements established in the FRL.