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H&CO
What is IEPS tax in Mexico?
H&CO : Aug 25, 2025, 1:40:36 PM
The Special Tax on Production and Services (IEPS) applies to the production and sale of certain goods and services in Mexico.If you're in Mexico,...
The 2027 Economic Package was approved by the Chamber of Deputies in November and forwarded to the Executive Branch for formal enactment. It outlines a strategy focused on consolidating a more effective Business Development model so that economic growth translates into greater investment and employment opportunities.
These proposals are intended for 2027, so discussions will continue throughout the final months of 2026 to determine which measures will ultimately be adopted.
To provide clarity on the matter, below is a summary of the most important points affecting SMEs and the digital economy in Mexico.
Tax Reforms and Simplification for SMEs and MSMEs in Mexico
The Mexican government seeks to strengthen the Corporate Income Tax (ISR) framework through a mechanism that standardizes authorized deductions and tax losses, while ensuring that smaller or newly established businesses are not adversely affected.
To directly support micro and small businesses, several simplification measures are proposed within the Simplified Trust Regime (RESICO):
- No new taxes or increases to existing tax rates are proposed. However, measures are being introduced to strengthen tax collection, combat tax evasion, and limit improper practices related to deductions, tax losses, tax risks, and simulated transactions.
- Income thresholds will be increased from MXN 3.5 million to MXN 5 million for individuals under the Simplified Trust Regime (RESICO). For legal entities, the income threshold will rise from MXN 35 million to MXN 50 million, and participation in the regime will become optional.
- Depreciation rates for certain fixed assets will be increased.
- RESICO taxpayers will be given the option to determine the amount of Value Added Tax (VAT) payable on a monthly basis by applying a 7% rate to the value of taxable and effectively collected transactions or activities. However, under this option, taxpayers will not be able to claim VAT credits for purchases or investments.
- The limit applicable to the deduction of net interest expenses (Article 28-XXXII of the Mexican Income Tax Law) will be reduced from 30% to 20%, and new limitations will apply to the use of tax loss carryforwards and certain deductions for legal entities with taxable income exceeding MXN 50 million.
- The annual tax-exempt threshold for individuals earning income exclusively from agricultural, livestock, fishing, or forestry activities will increase from MXN 900,000 to MXN 1 million.
- The calculation of the interest withholding tax rate under the Federal Revenue Law will be updated based on the macroeconomic projections included in the 2027 Economic Package, reducing the rate from 0.90% in 2026 to 0.68% in 2027.
- A capital repatriation program will be implemented with an ISR rate of 7.5% on repatriated capital, provided that the funds are invested in Mexico in assets and expenditures considered strategic for productive development.
- A 0% VAT incentive will be granted on the sale of books, newspapers, and magazines to taxpayers whose income from this activity represents at least 90% of their total revenue. These transactions are currently treated as VAT-exempt.
Promoting Access to Financing for SMEs
The growth of digital financial services will help meet increasing demand for credit and expand access to financing, particularly for small and medium-sized businesses.
To strengthen this area, the 2027 Economic Package includes the following initiatives:
- Through development banks, loans, factoring, and financial leasing will be provided to MSMEs that are part of supply chains associated with priority projects and state-owned productive enterprises.
- The Ministry of Finance and Public Credit (SHCP) will explore mechanisms, in coordination with other financial authorities and the private sector, to expand MSME financing through capital markets.
- With support from Nacional Financiera (NAFIN) and the National Bank for Foreign Trade (BANCOMEXT), financing will be promoted for companies that directly or indirectly supply products and services necessary for the development of strategic sectors under Plan Mexico.
- Through the National Bank of Public Works and Services (BANOBRAS), financing will be strengthened for logistics infrastructure development (ports, highways, airports, bridges), industrial service provision (power generation, water supply, drainage), and the consolidation of urban development centers and last-mile infrastructure (urban transportation, education, electrification, among others).
Fostering the Digital Economy, Infrastructure, and Technological Modernization in Mexico
In the 2027 Economic Package, the Mexican government also recognizes that investment associated with artificial intelligence development has boosted manufacturing and trade in high-tech goods.
To capitalize on and regulate this digital environment, several strategies will be implemented:
Digital Economy Law for Digital and Electronic Payments
The government proposes enacting this law, which could establish new registration, security, information, traceability, and interoperability requirements for FinTech companies, payment service providers, digital platforms, and other ecosystem participants.
The objective is to establish a legal framework for regulating electronic operations and transactions in response to the growing use of technological payment methods and the expansion of the digital economy.
Government Procedures and Customs
Greater efficiency in the collection of non-tax revenues will be achieved through the digital transformation of administrative procedures and the modernization of customs systems.
The SHCP will support the implementation of cryptographic information systems for issuing electronic warehouse certificates.
Likewise, it will participate in the authorization process for Financial Technology Institutions (ITFs) to facilitate the entry of new participants and promote a legal framework that strengthens the FinTech ecosystem.
Cybersecurity
In the area of information security, the SHCP will actively participate in coordination and communication efforts among financial authorities to address cybersecurity incidents.
Digital Banking
The technological infrastructure supporting digital banking will continue to be strengthened and modernized through platforms such as Bajecel, Banjetel, and Banjenet.
Technology Exports
The consolidation of manufacturing sectors with high technological content is expected, including computer equipment, electronics, and services associated with industrial activity and the digital economy.
ISR Withholding Rate
The Federal Revenue Law proposes a 2.5% ISR withholding rate applicable to the sale of goods and the provision of services carried out by individuals and business entities through technology platforms.
When legal entities do not provide their Federal Taxpayer Registry (RFC) number to technology platforms, the withholding rate will increase to 20%.
Complying with the New Provisions of the 2027 Economic Package Makes a Difference
The 2027 Economic Package presents a landscape of significant changes for MSMEs in Mexico, particularly in tax matters, access to financing, and digitalization.
Although it does not introduce new taxes or increase existing rates, it does propose modifications that may change how some businesses calculate taxes, apply deductions, utilize tax loss carryforwards, and conduct transactions through digital platforms.
At the same time, RESICO simplification measures, expanded financing through development banking, and the strengthening of the FinTech ecosystem may create new opportunities for businesses seeking growth and operational maturity.
To take advantage of these opportunities, companies should look beyond the initial announcements. The final provisions, congressional approvals, and subsequent regulations issued by authorities will determine the actual impact of these proposals.
It is also important not only to understand the changes but to know how to apply them. Seeking guidance from an experienced advisor, such as H&CO, can help businesses avoid disruptions to their tax processes.
Contact us for personalized guidance!
Frequently Asked Questions About the 2027 Economic Package
Does the 2027 Economic Package introduce new taxes for SMEs?
No. The 2027 Economic Package does not propose new taxes or increases in existing tax rates. However, it does introduce changes to deductions, tax losses, withholding requirements, and other provisions that could affect how certain businesses calculate and comply with their tax obligations.
What changes does the 2027 Economic Package propose for RESICO?
Among the main proposals is the expansion of income thresholds for remaining in RESICO: from MXN 3.5 million to MXN 5 million for individuals and from MXN 35 million to MXN 50 million for legal entities. For legal entities, participation in the regime would also become optional.
Additional proposals include changes to asset depreciation rules and the option to calculate VAT monthly by applying a 7% rate on taxable and effectively collected transactions, without claiming VAT credits on purchases or investments.
How will the 2027 Economic Package affect companies selling through digital platforms?
A 2.5% ISR withholding rate is proposed for the sale of goods and the provision of services conducted through technology platforms. If a legal entity does not provide its RFC number to the platform, the proposed withholding rate would increase to 20%.
Therefore, companies operating through these channels should closely monitor the final provisions and regulations issued by the authorities.
What measures does the 2027 Economic Package include to promote SME financing?
The proposal seeks to expand access to financing through development banking. MSMEs that are part of supply chains linked to priority projects could gain access to loans, factoring, and financial leasing.
It also contemplates mechanisms to facilitate MSME participation in capital markets and strengthen financing for companies operating within strategic sectors.
When will the 2027 Economic Package take effect?
The 2027 Economic Package is scheduled to take effect on January 1, 2027, in Mexico. Subsequently, tax authorities may issue complementary regulations and guidance. For that reason, businesses should wait for the final approved text before making tax decisions based solely on the announced proposals.
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