On November 26, 2024, the draft Bill of the Decree that enacts the Federal Income Law (Ley de Ingresos de la Federación or LIF per its acronym in Spanish) for fiscal year 2025 was submitted to the Commissions of Finance and Public Credit, and Legislative Studies of the House of Representatives. These Commissions approved the Bill on November 28, 2024, and it is now pending publication in the Federal Official Gazette (DOF per its acronym in Spanish).
The Economic Package for 2025 introduces relevant updates to fiscal policies and tax regulations, affecting various sectors of the Mexican economy.
Below is a summary of the main amendments to the Federal Income Law and related tax provisions.
General Highlights of the Economic Package 2025
- No new taxes: No new taxes have been introduced, and existing tax rates remain unchanged.
- Annual Gross Domestic Product (GPD) Growth Forecast: The government projects GPD growth of 2% and 3%.
- Estimated Revenues: Revenue projections for 2025 are detailed as follows (in millions of pesos):
Updates to the Federal Tax Code
Surcharge rates:
- Extension: The surcharge rate for unpaid balances remains at 98% per month.
- Installments: The following rates apply based on the repayment period.
- 1.26% per month for repayment periods of less than one year.
- 1.53% per month for periods between one and two years.
- 1.82% per month for periods exceeding two years.
Deadline for cancelling Electronic Tax Invoices (CFDI per its acronym in Spanish)
- May be cancelled no later than the last day of the month when the annual income tax return is due for the fiscal year in which the CFDI was issued. This is conditional upon the acceptance of the recipient of the CFDI.
Key Tax Incentives for 2025
Special Tax on Production and Services (IEPS) / Incometax
- Tax incentives are available for the acquisition and importation of diesel, biodiesel, and their blends under the Impuesto Especial sobre Producción y Servicios (IEPS per its acronym in Spanish) for final consumption in the following cases:
- Machinery Use: fuel used in general machinery (excluding vehicles).
- Agricultural or Forestry Activities: Fuel used for activities in these sectors.
- Automotive use: Fuel for vehicles exclusively used for public and private transportation services, including cargo, passenger transport, and tourism.
Income Tax Credits
- Toll Road Infrastructure Expenses: Taxpayers dedicated exclusively to public and private land transportation, including cargo, passenger, and tourism services may claim up to 50% of the total expense incurred for using toll road infrastructure within the national toll road network.
- Fossil Fuel Use in Production: A tax credit is available for purchasers who use fossil fuels in production processes to manufacture other goods, provided the fuels are not intended for combustion.
- Special Mining Duty Credit: Taxpayers with mining concessions or assignments whose total annual gross income from the sale or disposal of minerals and substances (as defined under the Mining Law) is below 50 million pesos, may claim a credit for the special mining duty paid.
- Cultural Products Deduction: An additional deduction of 8% for the cost of books, newspapers and magazines purchased by taxpayers (individuals or businesses) resident in Mexico, whose total income in the previous fiscal year did not exceed 6 million pesos.
- Suspension of Sports Incentive: The tax incentive for high-performance sports has been suspended.
Federal Tax Code Incentives
- Taxpayers, both individuals and legal entities, whose total income during the fiscal year that does not exceed 35 million pesos, may qualify for a 100% tax incentive on the following:
- Fines imposed for infractions of tax, customs, and foreign trade laws.
- Non-Payment Fines related to the noncompliance of tax obligations, excluding those directly related to payment.
- Aggravated Fines classified as aggravated under applicable regulations.
- Surcharges and Enforcement Expenses related to federal taxes (withheld or transferred), or compensatory quotas, provided they are administered and collected by the Mexican Tax Authorities, and the taxpayer complies with certain conditions.
*Exclusions: This incentive does not apply to individuals and corporations that have previously received any remission, reduction, or similar relief for the payment of their tax credits, as outlined in the decree published on May 20, 2019.
Customs clearance fees
- Exemption from the customs processing fee for persons importing natural gas.
Amendments to the Income Tax Law
Annual withholding rates:
- Financial interest income will be subject to an annual withholding rate of 0.50% of the principal amount.
Tax Exemptions for Earthquake-Affected Areas
- Income obtained by individuals with home in areas affected by the earthquakes of September 7 and 19, 2017 is not considered taxable income, provided the income stems from economic or monetary support received from authorized legal entities or trusts authorized to receive deductible donations. These funds must be exclusively allocated for the reconstruction or repair of their homes.
Agricultural, Livestock, Forestry, and Fishing Activities
- Individuals engaged exclusively in agricultural, livestock, forestry or fishing activities, who pay taxes under with section IV, Chapter II of Title IV, are required to pay income tax only on income exceeding 900,000 pesos collected during the year.
Adjusted Funding Limits for Cultural Projects
The following maximum amounts have been revised for cultural and artistic projects:
- Domestic cinematographic production: 750 million pesos.
- Distribution of national cinematographic films: 65 million pesos.
- National theatrical production, editing and publication of national literary works, visual arts, dance, music in specific fields of orchestra conducting, instrumental and vocal performance of concert music and jazz: 250 million pesos.
Hydrocarbons Revenue Law
- Existing rights for Shared Utility, Hydrocarbon Extraction, and Hydrocarbon Exploration have been replaced. Assignees are now required to make annual payments under the new Oil Right for Welfare, with monthly estimated payments as part of the compliance process.
Constitution of the United Mexican States
- The transfer of assets, rights and obligations during corporate reorganizations of state-owned public companies will not be considered taxable transfers. This exemption applies without additional requirements.
Closing Remarks
Our team of experts is available to address any questions or provide clarification regarding the provisions outlined in this document. Contact us for personalized assistance or further information.
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