Mexico’s 2027 Economic Package doesn’t introduce new taxes or raise income tax rates. However, it sets a new threshold that could reshape how businesses are taxed: 50 million pesos in annual revenue. This threshold is a key point in the tax reform, dividing businesses into two distinct categories with different compliance requirements and tax implications.
Below this line, the focus is on trust. Above it, control. The Simplified Trust Regime (Resico) raises its cap from 35 million to 50 million pesos for corporations and from 3.5 million to 5 million pesos for individuals. This significantly expands the pool of small taxpayers eligible for simpler rules, reducing their administrative burden and supporting a more business-friendly environment for smaller enterprises.
A New Deduction Limit for High Earners
The most significant change occurs above this revenue threshold. Companies earning over 50 million pesos annually and turning a profit face a new cap on deductions. If deductions account for 96.67% or more of revenue, they can’t exceed that percentage. Companies already deducting less than this can only apply 99% of their current deductions. This measure aims to curb excessive deductions that may be used to artificially reduce taxable income, ensuring a more equitable tax contribution from larger businesses.
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The corporate income tax rate remains at 30%. What changes is the base on which it’s applied, effectively increasing the taxable income for companies with high deduction levels. This adjustment is designed to prevent tax avoidance strategies that rely on aggressive deduction practices.
Consider a trading company with 1 billion pesos in sales and 980 million pesos in deductible expenses. Currently, its taxable profit is 20 million pesos, resulting in 6 million pesos in income tax. Under the new rule, it could only deduct 966.7 million pesos. Taxable profit would rise to 33.3 million pesos, pushing the tax bill to nearly 10 million pesos. This example illustrates how the new deduction limit can significantly impact the tax liability of high-revenue companies, aligning their tax contributions more closely with their actual economic activity.
Additional Safeguards and a Hidden Minimum Tax
Other measures include limiting carryforward losses to 50% of annual profit, though the utilization period doubles from 10 to 20 years. The cap on deductible net interest falls from 30% to 20% of adjusted taxable income, further tightening the rules around debt financing and interest deductions.
The figure 96.67% is particularly revealing. If deductions can’t surpass this share, affected companies will have a minimum taxable profit equal to 3.33% of revenue. Applying the 30% income tax rate, the tax effectively becomes 1% of sales.
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While not explicitly labeled a corporate minimum tax in the package, it functions similarly for impacted businesses, providing a floor for tax contributions and reducing the variability in tax payments among large corporations.
Targeting Tax Avoidance and Boosting Revenue
The Finance Ministry’s rationale is compelling. Of the 524,000 companies in the general regime reporting positive income in 2025, 318,000 paid no income tax, 60.7%. In 223,000 cases, 42.6%, deductions equaled or exceeded income.
Not all non-paying companies are evading taxes. Legitimate losses, substantial investments, or low-margin activities can explain this. However, the Ministry argues that a significant portion involves abusive deductions and fake invoicing. The Tax Administration Service (SAT) has intensified its crackdown, employing advanced data analytics and audits to identify and penalize non-compliant businesses. Between October 2024 and August 2025, it identified nearly 3,000 shell companies, blocked over 38,000 businesses linked to fictitious transactions, and audited nearly 2,000 buyers of fake invoices. The government now aims to shift from individual cases to a general rule, creating a more systematic approach to combating tax evasion.
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Revenue needs also play a role. The package projects a 7.2% real increase in income tax revenue for 2027, significantly outpacing expected economic growth. Companies with revenue above 50 million pesos contribute roughly 90% of corporate income tax, making them a critical target for revenue enhancement. The reforms aim to ensure that these companies contribute their fair share while maintaining a competitive business environment.
Potential Pitfalls and the Need for Refinement
The risk lies in businesses with real margins below 3.33% of sales, such as certain wholesale trade, fuel distribution, or construction activities. The new limit could force them to pay tax on profits they never actually earned, effectively becoming a minimum sales tax.
Combating fake invoices and artificial deductions is not only legitimate but essential. However, there’s a difference between closing loopholes and assuming deductions above a certain threshold are excessive. The challenge is to strike a balance between preventing tax avoidance and supporting legitimate business operations. The Congress will play a key role in refining these measures to ensure they achieve their intended objectives without causing undue harm to compliant businesses.
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