Mexico VAT Guide 2026

Overview — IVA (Impuesto al Valor Agregado)

The IVA is Mexico's federal value-added tax, applied at each stage of the production and distribution chain. Businesses registered for VAT collect IVA on their sales (output VAT) and can credit the IVA paid on their purchases (input VAT). The net difference is remitted to the SAT. The system broadly follows the destination principle, meaning exports are zero-rated and imports are subject to IVA. Most businesses with annual revenue exceeding MXN 2 million must register for IVA.

Standard Rate — 16%

The standard IVA rate of 16% applies throughout most of Mexico. This rate applies to the sale of most goods and services, imports, and certain digital services provided by non-resident platforms. The rate has been at 16% since 2014 (increased from 15% in 2010 and 11% prior). Services rendered by foreign digital platforms (streaming, ride-sharing, food delivery) to Mexican residents are also subject to 16% IVA, collected through withholding by the platform.

Border Zone Rate — 8%

A reduced IVA rate of 8% applies in the northern and southern border regions of Mexico, commonly known as the "zona fronteriza." This reduced rate applies to goods and services sold within the border zone, which extends approximately 20–25 km from the US border and certain areas of the southern border with Guatemala and Belize. The rate was reduced to support economic competitiveness in these regions. Businesses located outside the border zone but selling into it must apply the 8% rate if delivery occurs within the zone.

Zero Rate (Tasa 0%)

The 0% rate applies to specific categories of essential goods, meaning no IVA is charged on the sale, but the seller can still claim input VAT credits. Zero-rated items include:

• Unprocessed food products (meat, fish, fruits, vegetables, grains, milk, eggs, etc.)
• Processed foods for human consumption (bread, tortillas, cooking oil, etc.)
• Medicines and pharmaceutical products for human consumption
• Books, newspapers, and magazines
• Agricultural, livestock, and fishing equipment (certain items)
• Exports of goods and services
• Gold, silver, and precious metals (certain transactions by financial institutions)

Exemptions

Certain goods and services are fully exempt from IVA, meaning no IVA is charged and the seller cannot claim input VAT credits on related purchases. Exempt activities include:

• Education services (schools, universities, tutoring)
• Healthcare services (hospital, medical, dental services)
• Public transport of passengers (excluding air, rail, and某些 luxury transport)
• Rental of residential property
• Financial services (interest, loans, insurance, bonding)
• Cultural and sporting events (certain categories)
• Sales of used goods by individuals
• Lotteries, raffles, and gambling services

Exempt sellers cannot pass on IVA to customers nor recover IVA on their inputs, which makes the exemption potentially disadvantageous for businesses with significant input VAT.

Registration Threshold

Businesses whose annual revenue exceeds MXN 2 million must register for IVA with the SAT. Businesses below this threshold may register voluntarily or operate under the RESICO (Régimen Simplificado de Confianza) regime, which has simplified compliance obligations. Digital platform sellers (e.g., Amazon, Mercado Libre) may have different thresholds depending on the platform's agreement with the SAT.

CFDI Invoicing (Comprobante Fiscal Digital por Internet)

All IVA-registered businesses must issue electronic invoices (CFDI — Comprobante Fiscal Digital por Internet) for every transaction. The CFDI must include the RFC of both parties, a description of the goods or services, the IVA amount, and a digital stamp (sello digital) from a PAC (Proveedor Autorizado de Certificación). Key requirements include:

• Invoices must be issued in XML format with a valid SAT digital seal
• CFDI must be submitted to the SAT in real time (within 24 hours for most transactions)
• Complemento de pago (payment complement) required for installment payments
• Complemento Carta Porte required for transportation of goods
• International sellers of digital services must register with the SAT and issue CFDI

Failure to issue CFDI or issuing incorrect CFDI can result in significant penalties from the SAT.

Filing and Payment

IVA returns are filed monthly, due by the 17th of the following month. Businesses file through the SAT online portal, reporting output VAT, input VAT, and the net amount payable. In some cases, a quarterly filing option is available for small taxpayers. Electronic payment is made via SPEI (interbank transfer) or through the SAT portal.

FAQs

Can foreign companies charge IVA to Mexican customers?

Yes, foreign providers of digital services (streaming, apps, e-books, online courses) to Mexican residents must register with the SAT for IVA purposes. The 16% rate applies and is collected by the provider. Since 2020, large platforms (Netflix, Spotify, Uber, Airbnb) are required to collect and remit IVA.

Is IVA recoverable on business expenses?

Yes, registered businesses can credit input IVA paid on purchases and expenses directly related to their business activities, provided they have a valid CFDI from the supplier. Some expenses (e.g., entertainment, certain travel) may be non-creditable.

What happens if I don't issue a CFDI?

Failure to issue CFDI can result in fines ranging from MXN 1,800 to MXN 45,000 per invoice, plus potential criminal liability for tax fraud (defraudación fiscal) if intent to evade tax is proven.

Disclaimer

This guide provides general information about Mexican value-added tax (IVA) for the 2026 tax year. Tax laws and rates may change. The information is based on published SAT data and may not reflect individual circumstances. Always consult with a qualified Mexican tax advisor (contador) or the SAT directly for advice specific to your situation. InvestmentKit does not provide tax advice.