globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

04 March 2022

Mexican input VAT may no longer be creditable for activities performed outside Mexico – action required by 10 March

From 1 January 2022, taxpayers may no longer be able to claim credit for input value-added tax (VAT) for activities performed outside of Mexico. Taxpayers that wish to file an Amparo lawsuit challenging this new rule must do so by 10 March.

The Mexican tax reform, which came into force on 1 January 2022, includes a broad definition about “non-VATable activities,” requiring taxpayers to consider these activities when determining whether input VAT should be creditable. This definition/provision is significant and will affect businesses that are VAT registered in Mexico and incur VAT on costs in Mexico, but perform activities (e.g., sell goods or provide services) outside of Mexico.

The new law is likely to affect some supply chains, including manufacturing, mining and aviation to name a few.

Action required by 10 March

Businesses affected by the new tax law should consider whether they wish to file an Amparo lawsuit challenging the constitutionality of these rules. The final decision will be made by the Supreme Court of Justice. Businesses that do not file an Amparo will have to follow the new rules from 1 January 2022, which will affect their VAT deduction. 

The situation is time sensitive in that the Amparo lawsuit can only be requested after the first time the amended rule affects the taxpayer. If the provision is considered unconstitutional, the ruling will only protect those taxpayers that specifically requested it. The deadline to file an Amparo lawsuit is 10 March.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young, LLP (United States), Latin America Business Center, New York

Ernst & Young LLP (United States), Latin America Business Center, Chicago

Ernst & Young LLP (United States), Latin America Business Center, Miami

Ernst & Young, LLP (United States), Latin America Business Center, San Diego

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin America Tax Desk, Japan & Asia Pacific

Document ID: 2022-5235

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2025, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct