MEXICO · TAXES
Key Facts
- The law Congress passed an income tax law capping deductions for firms with revenue above 50 million pesos (US$2.7 million).
- The warning The dealers’ group AMDA says about 1,000 dealerships and 70,000 direct jobs are at risk.
- The exemption Fuel distributors and carmakers’ assembly plants got special treatment under the law, but car dealers did not.
- One company AMDA wants the president to issue a decree recognizing low-margin businesses such as dealers.
- Next step The law now goes to President Claudia Sheinbaum, who must sign it.
- Power Index Mexico ranks 2nd of 14 in The Rio Times Latin America Power Index, with 70.8 points (November 2026 edition).
Mexico car dealers are warning that a new income tax limit could force showrooms to close and cut jobs across the country. The Mexican Association of Automotive Distributors (AMDA) says about 1,000 dealerships and 70,000 direct jobs are at risk.
Congress approved it in the 2027 tax package for firms earning over 50 million pesos (US$2.7 million at 18.71 pesos per US$1 on 5 November). Fuel distributors and carmakers’ assembly plants got special treatment, but dealers did not.
What Congress Passed
President Claudia Sheinbaum sent the income tax reform to Congress on 8 September. The lower house’s finance committee approved it on 12 October, saying it aims to ease tax filing for small firms and fight fake invoices.
The reform limits how much of their expenses and past tax losses large companies can use to cut their tax bill. It applies to firms with revenue above 50 million pesos (about US$2.7 million).
Who Won an Exemption and Who Did Not
The Senate added changes, and on 3 November the Chamber of Deputies accepted them, sending the law to the president. The changes let fuel distributors keep deducting their costs when revenue tops 50 million pesos (about US$2.7 million).
Lawmakers said the change gives the auto industry certainty after tariff and shipping costs, and creates no new tax benefit. An opposition lawmaker noted that auto parts makers and LP gas distributors were left out.
What Car Dealers Say
AMDA says the law limits deductible expenses to a maximum of 96.6 percent, which hurts firms that earn only thin profits. It says dealers’ profit before tax runs between 1 percent and 3 percent of sales.
By AMDA’s own math, a dealer with a 2 percent profit margin would see its effective income tax rate jump from 30 to 50 percent. At a 1 percent margin the rate would reach 100 percent.
What Dealers Ask For
AMDA calls on the president to issue a decree that recognizes low-margin businesses such as dealers. It says the reform was meant to stop abuses such as fake invoices but now presses firms that pay their taxes.
AMDA says new-vehicle sales generate 180,000 direct jobs and feed federal, state and local taxes. It also says carmakers’ Mexican output has fallen because of US trade policy, and weaker dealers would hurt efforts to sell more cars at home.
In Plain English, Who Is Who
ISR is Mexico’s income tax, the Impuesto sobre la Renta. AMDA, led by executive president Guillermo Rosales Zárate, represents Mexico’s new-car dealers.
SHCP is Mexico’s finance ministry, and SAT is its tax agency. AMDA is asking the president, not Congress, for relief through a decree.
What It Means for You
For US readers, the dispute shows how Mexico’s push against tax fraud can squeeze low-margin businesses, such as car dealers. It also arrives as Mexico’s car market adjusts to its own tariffs, as our report on Mexico’s 50% car tariff describes.
AMDA says dealers account for 180,000 direct jobs and pay federal, state and local taxes. Our report on Chinese car sales in Mexico covers the wider market.
What Is Not Known
Whether Sheinbaum will issue the decree AMDA wants is not known. Her office and the finance ministry can answer once she signs the law.
When the law takes effect and appears in the official gazette is also open. The presidency can say once Sheinbaum signs it.
More: Latin America news in English, every day from The Rio Times.
Frequently Asked Questions
What does the new Mexican tax rule do?
It limits how much of their expenses and past losses large companies can deduct when they calculate income tax. It applies to companies with revenue above 50 million pesos (about US$2.7 million).
Who is exempt from the cap?
Lawmakers changed the rules for automakers’ assembly plants and for distributors of gasoline and diesel. Car dealers were not included.
How many dealerships are at risk?
AMDA says about 1,000 dealerships, up to 30 percent of its members, could close. It says up to 70,000 direct jobs are at stake.
What does AMDA want?
AMDA wants the president to issue a decree recognizing low-margin businesses such as dealers. It says the limit could put up to 30 percent of its members at risk of closing.
Sources: Mexican Chamber of Deputies, bulletin no. 4684 on the finance committee’s approval of the income tax reform, 12 October 2026; Mexican Congress, Chamber of Deputies vote accepting the Senate changes to the income tax law (article 78-E), 3 November 2026; AMDA (Mexican Association of Automotive Distributors), statements on the income tax reform, 28 October 2026; Bank of Mexico, FIX exchange rate of 18.7147 pesos per US$1, 5 November 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief