Decree dated March 27, 2026 / Effective: April 1, 2026 through September 30, 2027 The Government of Baja California has published a decree reducing the Impuesto sobre Remuneraciones al Trabajo Personal (ISRTP) - (the state-level payroll tax) for micro and small businesses operating in the state. If your company employs up to 50 people, you may qualify for an exemption of between 29% and 50% of this tax. What Does the Incentive Consist Of? The incentive is a partial exe

In Study 8/2025, regarding the admissibility of deductions for advertising and promotional expenses incurred by taxpayers who operate brands in our country under licensing agreements between related parties, Mexico´s Taxpayer’s Protection Office (PRODECON) shared several requirements that the Tax Administration Service (SAT) considers must be met in such transactions. These requirements relate to demonstrating the strict necessity of the expense, the materiality of the transa

On April 9, 2026, a Decree amending Article 141 of the Federal Tax Code was published in Mexico´s Official Gazette, entering into force the day after its publication. This amendment includes significant changes regarding the method of securing tax assessments. In accordance with tax regulations that would prevail in 2026, the aforementioned section 141 underwent significant changes, stipulating that taxpayers with tax assessments who wished to challenge them before administ

Recently, a Federal Court in Baja California declared several provisions of the Parking Service Regulations and the Municipal Building Law Regulations for Tijuana, B.C., unconstitutional. These provisions mandated that shopping centers in the state provide 40 minutes of free parking without any possibility of financial compensation for the service provider. This ruling sets a significant precedent regarding freedom of labor and commerce. The core of the unconstitutionality

As every year, taxpayers in Mexico, whether individuals or corporations, are obligated to file their Annual Income Tax Return (ISR), which is the mandatory tax report of income, deductions, and provisional payments for the immediately preceding fiscal year (2025). According to the regulations governing this matter, corporations have until March 31, 2026, to fulfill their obligation. Individuals, on the other hand, have from April 1 to 30, 2026, to complete this process.

We have previously stated that tax authorities, particularly the Tax Administration Service (SAT), have powers to verify taxpayers' compliance with their tax obligations; these powers are established in the Federal Tax Code and are exercised through audits. Recently, we have detected an increase in these audits, primarily in the area of ​​foreign trade. A foreign trade audit is a review procedure conducted by SAT (through its General Foreign Trade Audit Branch - AGACE) to v

Since fiscal year 2018, Mexico has offered two tax incentives applicable to taxpayers domiciled in the northern border region, related to Income Tax (ISR) and Value Added Tax (VAT). Taxpayers with a tax address, branch, agency, or establishment within the northern border region may have access to these incentives, which consist of a 50% reduction in the VAT rate (from 16% to 8%) and a tax credit equivalent to one-third of the ISR, in order to boost the local economy and com

At the beginning of 2026, the Tax Administration Service (SAT) announced its “best practices for transparency in audit processes.” In an official statement, the tax authority highlighted the best transparency practices that will be applied in 2026 in tax audit and/or review processes, in order to provide legal certainty and fair and equitable conditions for investment and compliance with tax obligations. In support of this, the SAT reported the following: · The

The Supreme Court of Justice of México (SCJN) recently upheld the constitutionality of the 10% additional tax on dividends (Article 140 of the Income Tax Law -ISR-), rejecting the claim that it violates rights and confirming the legality of this tax on profits distributed by companies to shareholders. This reaffirms the legality of established tax withholdings, not creating new taxes, but rather confirming those already in place on profit distributions to individuals. The S

On December 28, 2025, the Tax Administration Service (SAT), in order to simplify taxpayers' compliance with their tax obligations, published the Miscellaneous Tax Resolution for the 2026 fiscal year. Among the main topics, the following stand out: · Elimination of procedural requirements, establishing, in some cases, formats to facilitate their submission. · Reforms to the rules related to the issuance of tax receipts covering hydrocarbons, to combat and

Tax regulations that will come into force in 2026, establish new procedures for guaranteeing tax assessments owed by individuals and Corporations. Starting in January, specific and mandatory conditions for ensuring payment of tax assessments are established, in order of priority, in the event of challenges through administrative and/or judicial proceedings. Article 141 of the Federal Tax Code now mandates a specific order of alternatives to guarantee tax interest. The fir

Among the most relevant changes in tax regulations that will take effect in the next fiscal year, 2026, the one concerning the fight against the issuance and acquisition of fake invoices stands out. A new audit mechanism has been established in Article 49-Bis of Mexico´s Federal Tax Code, which will be carried out through inspections when SAT suspects that invoices issued by Companies do not cover legitimate transactions. This is an "express" audit that entails the temporar

Mexico´s Tax Administration Service (SAT) recently shared its criteria to conduct taxpayer audits, emphasizing that there is no list of individuals who will be subject to door-to-door visits, and urging citizens not to fall for scams circulating on social media. The elements that will be prioritized for initiating tax audits are the following: · Conducting transactions with shell companies that record/invoice false transactions to avoid tax obligations, or those tha

The Supreme Court of Mexico (SCJN), as a result of the Contradiction of Criteria 120/2025 ruling, has established/defined binding precedents on social security matters and recognizes that, in relation to the 2025 INFONAVIT reform, which incorporated Employer´s obligation to maintain salary deductions for employees with housing loans, are on medical leave from IMSS or absent from work, it is appropriate for employers to suspend salary deductions for the payment of said loans w

Companies established in Mexico are required annually to self-determine its workers' compensation insurance premium to be used during the fiscal year in order to comply with Social Security contributions obligations to the Mexican Social Security Institute (IMSS). However, we have detected cases in which IMSS, unilaterally and through an administrative resolution, corrects or reclassifies the workers' compensation premium upwards, causing harm to companies by forcing them t

Tax authorities have audit powers to verify compliance with taxpayers' tax obligations; these powers are established in the Federal Tax Code and are exercised through audits. We have detected an increase in these powers, particularly in foreign trade audits, leading to significant tax assessments that could permanently affect companies. There are alternative solutions that could be useful in the early stages of the audit. Advance Dispute Resolutions (Settlement Agreements

Article 22 of the Federal Tax Code establishes the process that a taxpayer (individual or legal entity) must follow to obtain a tax refund when a credit balance is generated in their tax returns. However, we have documented cases in which the tax authority makes excessive information requests and unilaterally withdraws the applicants' requests, or, worse yet, denies them the refund through an appealable resolution. At TP Legal, we sponsored a significant case in which a com

The process of suspending and subsequently canceling taxpayers' Digital Seal Certificates in Mexico (CSD) has become increasingly common (and, not to mention, effective for the authorities). The CSD is elemental to issue an invoice (Digital Fiscal Receipt – CFDI) for any transaction carried out by companies. The process is pre-established in Article 17-H Bis of the Federal Tax Code; however, the authorities have increasingly implemented cases whose clarification process has

Registration in the Business Certification Scheme (CIVA) for VAT and IEPS has been, since its inception, an incentive for taxpayers, as it allows them to generate a tax credit equivalent to 100% of the amount owed for these taxes in the case of specific transactions. However, CIVA, in addition to providing benefits, entails ongoing obligations that all those who benefit from the certification must comply with. Therefore, we have detected a considerable increase in cases in