MEXICO · TAX
Key Facts
- Power Index Mexico ranks 2nd of 14 in The Rio Times Latin America Power Index, with 71.4 points (October 2026 edition).
- What is happening The US Chamber of Commerce, a big business lobby, urged Mexico’s Senate not to approve its tax package.
- Why it matters Limits on deductions could raise taxes on US-owned businesses in Mexico and cut their investment, the group says.
- The numbers Interest deductions would fall from 30% to 20% of adjusted income; loss use would be capped at 50%.
- Who is who Neil Herrington, senior vice president for the Americas at the US business lobby, signed the letter.
- What to watch Mexico’s president must publish the income tax law in the official gazette; no date has been given.
- What it means for you US firms with Mexican units may pay more tax from 2027, and cross-border pricing deals could change.
The US Chamber of Commerce, a large American business lobby, has warned Mexico about its 2027 income tax changes. Its letter says limits on deductions would hit companies with real operations.
The US Chamber of Commerce published a letter on Tuesday, 3 November, urging Mexico’s Senate to change its 2027 tax package. Neil Herrington, its senior vice president for the Americas, signed the letter, which is addressed to Mexican Senator Yunes.
The Chamber says the rules would hit companies with real operations, including US firms. Mexico is a major market for US goods, so the warning reaches investors and supply chains in many American industries.
- US Chamber of Commerce: a large American business lobby that speaks for member companies.
- Income tax (ISR): Mexico’s tax on company and personal income.
- Transfer pricing: the prices that related companies charge each other across borders.
- Advance pricing agreements: deals between tax authorities that fix those prices in advance.
- Senate and Chamber of Deputies: the two houses of Mexico’s Congress.
What the Letter Says
The Chamber backs the fight against tax abuse, but says the proposals also reach ordinary costs such as payroll, inventory and leases. It says the limits would operate as a minimum taxable-profit threshold.
Cutting the deductible share of interest from 30% to 20% of adjusted taxable income would raise the cost of capital, it says. Limiting the use of past tax losses to 50% of taxable income would undermine investment plans made under earlier rules.
Provisional payments could exceed a firm’s expected annual tax, which would strain cash flow. Rules on deducting payments to foreign residents could cause double taxation and clash with the Mexico-US tax treaty.
The Chamber also warns that new transfer-pricing limits could undo advance pricing agreements already agreed by US and Mexican tax authorities. Those agreements settle in advance how related companies price transactions across the border.
What the Chamber Asks For
The letter makes 11 recommendations. They include keeping the 30% interest limit, full use of earlier losses and flexible advance payments.
It also asks for transition rules for existing investments and a technical dialogue with affected industries before final rules. Another request is a safe harbour for companies with real operations, electronic invoices and a clean compliance record.
Where the Law Stands
Mexico’s Senate approved the income tax law on Tuesday, 27 October, a week before the letter was published. The lower house then approved the Senate’s changes on Tuesday, 3 November, and sent the law to the president for publication.
The final law caps deductions for companies with income above 50 million pesos (about US$2.7 million), with automakers and gas stations exempt. The letter’s request to the Senate therefore arrives after the Senate has voted.
What It Means for US Readers
Mexican units of US firms above the income line face tighter deductions from 2027. The Chamber says that could cut investment and hiring, and put treaty and transfer-pricing deals in question.
Conversions use the Bank of Mexico’s official FIX rate of 18.76 pesos per US dollar, set on 3 November 2026. See also Mexico Tax Reform on Big Firms Clears House and Mexico Trade Pact Faces Yearly US Reviews.
More is in the Mexico economy guide, the Mexico-US relations guide and the Mexico hub. Many of the affected firms are run from Mexico City.
What Is Not Known
The letter carries no date, so it is unclear when it was written or sent. It cites no figures for US investment, jobs or lost output.
The Chamber does not name the companies behind its concerns. The documents checked contain no official Mexican reply.
What Comes Next
The president’s office must publish the law in the official gazette before it applies from 1 January 2027. The documents checked contain no decision on the Chamber’s requests.
A letter to the Senate does not by itself reopen a law that both chambers have passed. Its call for a technical dialogue may matter for later rules, though none have been announced.
Frequently Asked Questions
What did the US Chamber of Commerce ask Mexico to do?
It asked Mexico’s Senate not to approve the 2027 economic package as drafted and to change the tax limits. The letter makes 11 recommendations.
Which tax changes worry the Chamber most?
It points to limits on deductions, a lower interest deduction cap of 20% and a 50% limit on using past losses. It also cites double taxation risks.
Has Mexico already passed the income tax law?
Yes. The Senate approved it on 27 October and the lower house gave final approval on 3 November, so it now awaits publication.
Who signed the letter?
Neil Herrington, the Chamber’s senior vice president for the Americas, signed it. It is addressed to Senator Yunes and copied to senior Mexican officials.
Sources: U.S. Chamber of Commerce, letter to the Mexican Senate regarding the 2027 Economic Package, 3 November 2026; Cámara de Diputados, Gaceta Parlamentaria (plenary record, 3 November 2026); Senado de la República (plenary session of 27 October 2026) (accessed 4 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