Mexico’s 2026 VAT Reforms: Digital Platforms & B2B Transactions

September 24, 2025

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At the beginning of September, the Mexican Ministry of Finance and Public Credit (SHCP) submitted the Economic Package for 2026 to Congress, outlining the government’s financial and economic framework for the upcoming year. The package outlines expected government income, proposes reforms to key tax laws, and addresses changes to tariffs and customs rules, making it a comprehensive plan that defines how Mexico intends to manage revenue collection, taxation, spending, and broader economic policy.

Main VAT Measures from the 2026 Economic Package

The Mexican SHCP stated that it expects a 4.92% increase in VAT revenue, which is the second-largest generator of revenue after the Income Tax, in 2026 compared to 2025. In addition to this expected growth, the 2026 Economic Package also includes provisions for reforming the VAT system.

One of the most notable provisions refers to the proposal to extend the VAT withholding regime to B2B transactions, applying the same logic currently used for B2C transactions. Under the proposed measures, the digital platform will be required to withhold 50% of the VAT when the seller is a business registered in the Federal Taxpayers Registry (RFC). In cases when the seller is not registered with RFC, digital platform operators must withhold 100% of the due VAT.

There are two additional scenarios when complete VAT withholding applies. Those two scenarios include situations when non-residents sell goods located in Mexico or when payments are made to foreign bank accounts.

A significant innovation in the tax reform is the requirement for both domestic and foreign digital service providers to grant the Mexican Tax Authority, commonly referred to as SAT, real-time online access to transaction records related to their operations in Mexico. Non-compliance with these obligations may result in the temporary blocking of the platform's internet access, a strict enforcement mechanism often referred to as a kill switch.

Conclusion

With the 2026 Economic Package, the Mexican government aims to implement significant changes to VAT, excise taxes, and income taxes, as well as the federal tax code. All the proposed changes and novelties are under review until October 31, 2025, and, if adopted, they will take effect on January 1, 2026.

Nevertheless, digital platform operators and other businesses affected by the proposed reform should prepare to comply with new rules and regulations, especially considering that non-compliance will result in a temporary ban on market access.

Source: Ministry of Finance and Public Credit, Bloomberg, KPMG

What is the 2026 Mexican Economic Package?

The 2026 Economic Package is a proposal submitted by Mexico’s Ministry of Finance that outlines tax reforms, revenue expectations, and economic policies for the upcoming year.

How much is VAT revenue expected to increase in 2026?

VAT revenue is expected to rise by 4.92% in 2026 compared to 2025, making it the second-largest source of government revenue after income tax.

What VAT changes are proposed for digital platforms?

The proposal extends the VAT withholding regime to B2B transactions, requiring platforms to withhold 50% when sellers are registered with RFC and 100% when they are not.

When does full VAT withholding apply?

Full VAT withholding applies when non-residents sell goods located in Mexico, when sellers are not registered with RFC, or when payments are made to foreign bank accounts.

What new compliance obligations will digital service providers face?

Digital service providers, both domestic and foreign, must give Mexico’s Tax Authority real-time access to transaction data, with non-compliance leading to temporary internet blocking.

When will the proposed tax reforms take effect?

If approved, the tax reforms in the 2026 Economic Package will come into effect on January 1, 2026, after the review period ends on October 31, 2025.

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