FINAL-NFTC-Letter-on-Mexico-Tax-Investment-Issues-March-16

Sep 14, 2026

Uploaded by James

Letter by the National Foreign Trade Council (NFTC) to Mexico’s Secretaría de Hacienda y Crédito Público regarding worsening tax and investment conditions for U.S. businesses in Mexico. The document argues that changes reflected in the 2026 Economic Package and enforcement actions by the SAT have expanded aggressive audit practices, including retroactive VAT credit denials, denial of income tax deductions for bona fide related-party payments, and a pay-to-play dispute mechanism requiring deposits to access appeals. It also highlights requests for highly sensitive confidential information and constraints on judicial recourse.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages7

Reading Time18 min

AccessFree to download

Mexico tax and investment concerns

Context: NFTC review of USMCA and 2026 Economic Package

Audit environment and enforcement practices

Retroactive VAT reinterpretation and credit denials

Arbitrary denial of income tax deductions for related-party payments

Dispute resolution constraints and information requests

March 16, 2026 Excm. Secretario Édgar A. Amador Zamora Secretaría de Hacienda y Crédito Público Palacio de Hacienda Av. Plaza de la Constitución, Palacio Nacional 3045 Col. Centro, Alcaldía Cuauhtémoc, CP 06060 Ciudad de México, México Re: Mexico's Tax Administration Service (SAT) The National Foreign Trade Council (the “NFTC”) is writing concerning the worsening tax and investment environment for U.S. businesses in Mexico. During the NFTC’s engagement in the ongoing review of the US-Mexico-Canada trade agreement (USMCA), we highlighted several troubling and onerous Mexican taxation proposals in its 2026 Economic Package (“Paqueteeconómico”), which passed into law on November 7, 2025, and complicates the very job-creating incentives that USMCA is intended to foster. The effect of these measures is compounded by irregular enforcement practices undertaken by the Servicio de Administración Tributaria (the “SAT”), creating a tax administration regime that places growing and unprecedented burdens on many U.S. multinational companies, thereby disincentivizing the investment and job creation that Mexico has sought to attract. The NFTC, organized in 1914, is [an association of U.S. business](an association of U.S. business) enterprises engaged in all aspects of international trade and investment. Our membership covers the full spectrum of industrial, commercial, financial, and service activities. We value work that focuses on establishing and maintaining international tax norms that provide certainty to enterprises conducting cross-border operations and are attractive to businesses making choices regarding new investments. For several years, numerous U.S. multinationals operating and investing in Mexico have faced persistent audit challenges with the SAT, and these issues have escalated over the past year. While the SAT’s public messaging in its “Plan Maestro 2026” highlights an intent to target high-risk, non-compliant taxpayers and streamline compliance, in practice we are continuing to see a broad scope of aggressive and dubious tax audits, including: the retroactive and arbitrary National Foreign Trade Council 1225 New York Avenue NW, Suite 650B, Washington, DC 20005 202-887-0278 Serving America ’s Global Businesses Since 1914. [www.nftc.org](www.nftc.org 1)[ 1](www.nftc.org 1) denial of legitimate VAT credits and tax deductions; the wholesale disallowance of income tax deductions for bona fide business expenses, including with respect to related-party payments; an extractive and opaque “pay-to-play” dispute resolution mechanism that requires deposits to access appeals; and unwarranted company-by-company solicitation of highly sensitive business-confidential information. Furthermore, many multinational companies feel they have fewer options for judicial redress in response to SAT’s overreach, given the recent legislative changes that limit the autonomy of Mexico’s judicial system. Retroactive VAT Reinterpretation and Credit Denials The NFTC has received reports from certain U.S. companies that the SAT has been arbitrarily reinterpreting its value-added tax, doing so to retroactively deny longstanding tax credits for VAT paid to third-party suppliers (an accepted practice since 2015) . This is creating double-taxation issues that undermine fundamental international tax principles and contravenes the flexibility under the Industria Manufacturera, Maquiladora y de Servicios de Exportación (IMMEX)-based“duty drawback”, which allows companies to defer or reduce VAT on imported inputs used in export production, and has historically underpinned Mexico’s competitiveness.1 U. S. companies are being hit with demands for repayment of tax credits ofup to 1 billion USD in some cases, accompanied by fines for previously-unannounced violations, on taxes paid over the last decade. This reinterpretation has also extended to other routinely claimed tax deductions, further broadening the scope of retroactive liabilities.

FAQs

What prompted the NFTC letter to Mexico’s tax authorities?

The NFTC cites worsening tax and investment conditions for U.S. businesses in Mexico, pointing to troubling taxation proposals and enforcement practices by the SAT during the review of the USMCA.

How does the SAT’s approach affect VAT credits and refunds?

The letter states the SAT is retroactively reinterpreting value-added tax, denying longstanding VAT credits, expanding refund validation requirements, and delaying refunds through extensive and sometimes unrelated information demands.

What types of SAT tax audit actions are described in the document?

The document describes broad aggressive and dubious audits, including denial of legitimate VAT credits, disallowance of income tax deductions for bona fide business expenses and related-party payments, a pay-to-play dispute mechanism requiring deposits, and solicitation of highly sensitive confidential information.

Sep 14, 2026

Uploaded by James