Key takeaways
- On September 8, Mexico's Finance Ministry delivered the 2027 economic package to Congress. It creates no new taxes and raises no rates, and it targets tax revenue at a record 15.9 percent of GDP through enforcement and a set of new limits inside the income tax law.
- Companies with more than 50 million pesos of income that show a profit lose part of their deductions. Deductions get capped at 99 percent of themselves, or at 96.67 percent of income when they run higher, with the excess carried forward twenty years.
- Prior-year tax losses can only absorb 50 percent of a year's taxable profit. The carryforward window doubles from ten years to twenty, which softens the arithmetic without changing the direction.
- The net interest deduction limit falls from 30 percent to 20 percent of adjusted taxable profit. If your Mexican entity is financed by loans from the parent, this is the line that moves first.
- Entities registered with the tax authority for fewer than five years are exempt from the deduction cap, and so are companies carrying out maquila operations. Entity age and tax regime now carry a measurable value.
- Congress has until October 20 in the Chamber of Deputies and October 31 in the Senate for the revenue law. Whatever survives takes effect January 1, 2027, and the provisional-payment factors make 2027 the cash-flow year.
On September 8, Finance Secretary Edgar Amador Zamora handed the 2027 economic package to the Chamber of Deputies. The headline was the one the government wanted. Tax revenue will reach a record 15.9 percent of GDP, the ministry's release said, "sin crear nuevos impuestos."
The sentence after it is the one that matters if you own a Mexican company: "Este resultado se apoyará en una mayor eficiencia recaudatoria, el combate a la evasión, la elusión y las empresas que facturan operaciones simuladas."
Efficiency, in this package, has a specific shape. It is a set of new limits written into the income tax law that fall on companies above 50 million pesos of income, that are profitable, that carry losses from earlier years, and that are financed with debt. Read together, they describe a mature foreign-owned subsidiary. Read closely, they also describe who is left out.
The cap on deductions
The centrepiece is a new chapter in the income tax law that limits authorized deductions for legal entities with more than 50 million pesos of accumulated income in a year in which they show a taxable profit.
The mechanism has two tiers. VCG Partners quotes the initiative directly: "Limitar las deducciones autorizadas al 99%, cuando éstas no excedan del 96.67% de los ingresos acumulables, o limitarlas al 96.67% de dichos ingresos, cuando sí excedan de ese porcentaje."
So a company whose deductions sit below 96.67 percent of income deducts 99 percent of them. A company whose deductions run above that line deducts no more than 96.67 percent of income, whatever it actually spent.
The worked example practitioners are circulating uses 120 million pesos of income against 100 million of deductions. The company loses one million pesos of deductions that year. As the note puts it, "Aunque la diferencia sea solo 1% de las deducciones, en una empresa con operaciones grandes puede representar un importe importante."
What you lose is deferred. The excess carries forward for twenty fiscal years, updated for inflation, subject to the same cap each time it is used. It stays with the entity that generated it and does not move through a merger or spin-off, and it is not a tax loss.
The ministry's stated reason sits in the explanatory memorandum. Above the 96.67 percent line, it found, "aumenta de manera relevante la proporción de operaciones identificadas como riesgosas." The cap is an enforcement tool wearing the clothes of a rate.
The half-life of a loss
The second measure changes what a prior-year loss is worth.
Under current law, a company applies its accumulated tax losses against taxable profit in full, for up to ten years. The initiative limits that to 50 percent of the year's taxable profit for companies above the 50 million peso line, and stretches the window to twenty years. Losses generated through 2026 get the twenty-year window from the year they arose.
The two rules stack. The deduction cap raises taxable profit, and then losses may absorb only half of it. Extending the practitioner example with 12 million pesos of available losses, the fiscal result under the proposal is 10.5 million pesos and the income tax is 3.15 million, against 2.4 million under the rules in force today.
For a plant in its first years, this is the rule to model. Start-up losses are normal and they used to come back quickly once the line turned profitable. Under the proposal, they come back at half speed.
The interest limit that reaches the parent's loan
The third measure is one line in Article 28, fraction XXXII. Garrido Licona states it plainly: "Se modifica la tasa utilizada para el cálculo de la utilidad fiscal ajustada (UFA) que pasa del 30% al 20%."
The rule already exists. Net interest above 30 percent of adjusted taxable profit is not deductible, for taxpayers whose net interest exceeds 20 million pesos. The initiative lowers the ceiling to 20 percent.
If your Mexican entity was capitalized with intercompany debt from Toronto, Montréal or Chicago, this is the measure that moves your effective rate first, and it does not carry a five-year exemption. It is the strongest push yet toward equity in the capital structure of a Mexican subsidiary, and it lands on entities of every age.
Who the package leaves alone
Here is the part worth reading twice.
The deduction cap does not apply to everyone above 50 million pesos. Garrido Licona lists the exceptions from the initiative: "Tengan menos de cinco años de haber obtenido su registro en el RFC; quienes tributen en el Régimen de Coordinados o sector primario; quienes apliquen la deducción inmediata de activos; los que realicen operaciones de maquila; los que se encuentren en concurso mercantil; y algunos casos de fusión o escisión."
Two of those carry direct consequences for a company entering Mexico.
An entity registered for fewer than five years is outside the cap. A company that incorporates in 2027 does not meet this rule until 2032. The drafters saw the obvious response and blocked it: certain mergers and spin-offs inside that window do not restart the count.
An entity carrying out maquila operations is also outside it. That is the tax regime a parent-owned plant usually sits in when the parent supplies the inventory and a set share of the machinery, and it is the regime an IMMEX program is built around on the manufacturing side.
Put those together and the structure you choose on the way in now has a number attached to it. A new entity buys five years outside the cap. A maquila regime sits outside it for as long as it qualifies. And a company that enters Mexico by acquiring an existing business inherits an entity that is very likely inside it from day one, with a loss history that will now come back at half speed.
That last point belongs in the diligence on any Mexican target. The age of the RFC and the shape of the loss carryforward are now price items.
The cash-flow year is 2027
Mexican companies pay income tax monthly in advance, on a coefficient derived from the prior year's profit. The initiative adjusts that coefficient for companies above 50 million pesos, using factors that key off last year's deduction ratio.
The factors circulating are 1.0658 where deductions sat at or below 96.67 percent of income, and 2.6162 where they ran above it. The 50 percent loss rule applies to each monthly payment as well.
The practitioner note is direct about what that means: "Esta regla puede tener un efecto importante en el flujo de efectivo durante 2027." The annual return would settle the difference, but a thin-margin entity would be funding the treasury month by month at more than double its current coefficient to get there.
The customs side of the same law
The revenue law also closes the loop on the tariffs we covered two weeks ago.
Article 32 has Congress approve the tariff modifications the Executive made over the year, which TLC Asociados lists decree by decree, including the March 26, 2026 decree covering automotive, manufacturing, IMMEX and sectoral programs. The same initiative projects revenue from anti-dumping duties rising 55 percent, from 1,807 million pesos in 2026 to 2,806 million in 2027. Nobody budgets a 55 percent increase in trade-remedy collections without expecting more cases.
The late-payment surcharge holds at 1.38 percent a month.
What happens between now and January
The calendar is fixed by the Constitution. The Chamber of Deputies has until October 20 to approve the revenue law and the Senate until October 31. The spending budget is the Chamber's alone, by November 15. Publication in the Official Gazette follows within twenty days, and the package takes effect January 1, 2027.
The macro frame underneath it assumes growth of at least 2 percent, an exchange rate of 18 pesos to the dollar, inflation of 3 percent and a public-sector borrowing requirement of 3.9 percent of GDP, 1.8 points below 2024. If you are modelling a Mexican entity for 2027, those are the ministry's own inputs.
The deduction cap is the piece most likely to be negotiated in committee. The interest limit and the loss rule are quieter, and quiet measures tend to survive.
The bottom line
No new taxes is a true sentence about this package, and it is not the useful one.
The useful one is that from January the tax the Mexican state collects from a company depends on how old that company is, how it is financed, what regime it runs under and whether it carries losses. Three of those four are decided before the entity exists, and the fourth is inherited when you buy one.
If you are entering Mexico this year, the structure question now has a tax answer attached to it, and the answer is worth more than it was on September 7. If you are already here, the hour to spend is on the 2027 provisional-payment coefficient, because that is where the cash goes first.
Calder & Vale advises Canadian and US companies entering and operating in Mexico on entity structure, on site and incentives through direct relationships with the state economic development ministries, and on the Mexican side of acquisitions.
Frequently asked questions
Does the deduction cap apply to a Mexican subsidiary we set up recently?
Not under the initiative as filed. Companies with fewer than five years since their RFC registration are exempt, alongside coordinated taxpayers, the primary sector, companies in bankruptcy, companies carrying out maquila operations and taxpayers using immediate depreciation. The drafters also closed the obvious route around it: certain mergers and spin-offs inside that window do not reset the clock.
What actually happens to the deductions we lose?
They are deferred. The disallowed amount carries forward for twenty fiscal years, updated for inflation, and remains subject to the same cap each year. It is personal to the entity and cannot be transferred through a merger or spin-off, and it is not treated as a tax loss.
How does the 50 percent loss rule interact with the deduction cap?
The cap is applied first, which produces a higher taxable profit, and then prior-year losses may absorb at most half of that figure. A practitioner example on 120 million pesos of income, 100 million of deductions and 12 million of available losses moves the income tax from 2.4 million pesos under current rules to 3.15 million under the proposal.
Is the 20 percent interest limit new?
The limit is not new. Article 28, fraction XXXII of the income tax law already restricts net interest deductions to 30 percent of adjusted taxable profit for taxpayers whose net interest exceeds 20 million pesos. The initiative lowers the 30 percent to 20 percent. For an entity funded by intercompany loans from Canada or the United States, the deductible share of that interest shrinks by a third.
Does any of this touch the tariffs Mexico introduced in January?
The revenue law ratifies them. Article 32 of the initiative has Congress approve the tariff modifications the Executive made over the year, including the March 26, 2026 decree covering automotive, manufacturing, IMMEX and sectoral programs. The same law projects revenue from anti-dumping duties rising 55 percent, from 1,807 million pesos to 2,806 million.
When is any of this final?
The Chamber of Deputies has until October 20 to approve the revenue law and the Senate until October 31. The spending budget is the Chamber's alone, by November 15. Publication in the Official Gazette follows, and the package takes effect January 1, 2027. The initiative can change in committee, and the deduction cap is the piece most likely to be negotiated.
Robert Katona is the founder of Calder & Vale, a cross-border advisory firm working across all of North America. He advises operators, investors, and institutions on market entry, partner selection, and growth strategy throughout the region.
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