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Mexico VAT (IVA): 16 percent, 0 percent exports and basic goods, exemptions, credits, refunds and withholding

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Last verified: 2026-10-26 · Status: Stable

Mexican VAT (IVA) is 16 percent on sales of goods, independent services, leasing and imports, charged separately on the invoice and paid monthly by the 17th as the difference between VAT charged and creditable VAT paid. Exports and listed basic goods such as unprocessed food and medicines are taxed at 0 percent, which keeps the right to recover input VAT; land, housing, books by their authors and some financial items are exempt, which does not. Input VAT is creditable only if the expense is deductible for income tax, invoiced with the VAT shown separately and paid; balances in favor can be carried forward or refunded, and the SAT must refund within 40 days of a complete claim.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

VAT standard rate	16 %LIVA art. 1o., as of 2026-10-26 · in force
VAT rate on exports of goods and qualifying services	0 %LIVA art. 29, as of 2026-10-26 · in force
VAT filing and payment	Monthly, by the 17th of the following month LIVA art. 5o.-D, as of 2026-10-26 · in force
Legal term for the SAT to pay a complete refund claim	40 daysCFF art. 22, as of 2026-10-26 · in force
Reduced VAT rate in the northern and southern border regions (incentive decree, through 31 December 2026)	8 %Border region decrees, extended to 31 December 2026 by decree DOF 31 December 2025, as of 2026-10-26 · in force
Validity of the SAT VAT certification for IMMEX and similar regimes	1 yearLIVA art. 28-A, as of 2026-10-26 · in force

The rule

1. Rate, scope and monthly payment. Individuals and companies that, in Mexico, sell goods, provide independent services, grant the temporary use of goods or import goods or services pay VAT at 16 percent of the value. VAT must be passed on to the customer expressly and separately and is not part of the price base. Each month the business pays the VAT charged less creditable VAT, by the 17th day of the following month.
Cost to do it: 16 percent, collected from customers; the business's own cost is the cash flow gap and compliance.
Example: A software services company invoices MXN 2,000,000 plus MXN 320,000 of VAT in March and paid MXN 120,000 of creditable VAT on its purchases. It pays MXN 200,000 by 17 April. / Invoices of about USD 108,093 plus VAT of about USD 17,295; net payment of about USD 10,809 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Arts. 1o. and 5o.-D, 1978-12-29 official text · verified 2026-10-26

2. 0 percent rate. VAT is calculated at 0 percent on, among others, sales of unprocessed animals and plants, patent medicines and food for human and animal consumption (excluding beverages other than milk, flavored drink syrups and concentrates, caviar and smoked salmon, food additives, chewing gum and processed pet food), ice and non carbonated water (except in containers under ten liters), and listed agricultural machinery. Businesses taxed at 0 percent still recover the VAT they pay on inputs.
Cost to do it: No VAT to customers; input VAT becomes a recoverable balance, so refund timing matters.
Example: A food distributor sells MXN 10,000,000 of basic food at 0 percent and pays MXN 400,000 of VAT on rent, fuel and services. It has a MXN 400,000 balance in its favor that it can credit later or claim as a refund. / Sales of about USD 540,465; refundable input VAT of about USD 21,619 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Art. 2o.-A, 1978-12-29 official text · verified 2026-10-26

3. Exports at 0 percent. Companies resident in Mexico apply 0 percent to definitive exports of goods under the customs law, to sales of intangibles to foreign residents, to the use abroad of intangibles provided by Mexican residents, and to services used abroad for technical assistance, maquila and submaquila for export and advertising, among others listed in the article.
Cost to do it: 0 percent VAT on the export sale with full input VAT recovery.
Example: A Mexican engineering firm provides technical assistance used abroad to a US client for MXN 5,000,000. It charges 0 percent VAT and recovers the MXN 160,000 of VAT paid on its own inputs. / Export of about USD 270,232; recoverable input VAT of about USD 8,647 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Art. 29, 1978-12-29 official text · verified 2026-10-26

4. Exempt sales. No VAT is due on sales of land; buildings used as homes (hotels excluded); books, newspapers and magazines and the right to use a work when sold by its author; used movable goods sold by non businesses; lottery tickets and prizes; national and foreign currency; and shares, partnership interests and credit instruments, among others. Exempt sellers cannot credit VAT paid on related costs, so it becomes a cost.
Cost to do it: Input VAT on exempt activities is not creditable and becomes part of the cost.
Example: A homebuilder sells houses for MXN 50,000,000, exempt from VAT. The MXN 3,000,000 of VAT it paid on construction materials and services cannot be credited and is a cost of the project. / Sales of about USD 2,702,323; non recoverable VAT of about USD 162,139 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Art. 9o., 1978-12-29 official text · verified 2026-10-26

5. Conditions to credit input VAT. VAT paid is creditable only if it relates to goods, services or the use of goods strictly indispensable for activities taxed at 16 or 0 percent, which means deductible for income tax (in proportion when only partly deductible); it was passed on expressly and separately on an electronic invoice (or, on imports, the customs declaration is in the taxpayer's name and shows the VAT paid); and it has been actually paid. For specialized services or works under the outsourcing rules, the customer must also verify the contractor's registration with the Ministry of Labor and obtain copies of the contractor's VAT return and payment receipt for the period, or reverse the credit.
Cost to do it: Non creditable VAT is a 16 percent cost on the expense.
Example: A company pays MXN 100,000 plus MXN 16,000 of VAT for a specialized maintenance service but does not obtain the contractor's VAT return and payment receipt by the end of the following month. It must reverse the MXN 16,000 credit with an amended return. / Service of about USD 5,405; credit at risk of about USD 865 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Art. 5o., sections I and II, 1978-12-29 official text · verified 2026-10-26

6. VAT withholding and balances in favor. Companies withhold the VAT charged to them when they receive independent personal services or rent goods from individuals, buy scrap, receive ground freight services or pay individual commission agents, and anyone who acquires or rents tangible goods from foreign residents without a permanent establishment withholds the VAT; withheld VAT is paid by the 17th of the following month without any credit against it. A VAT balance in favor can be credited against VAT of later months until used up or refunded in full; partial refund requests are not allowed.
Cost to do it: Withholding shifts the payment duty to the customer; refunds tie up cash until paid.
Example: A company rents an office from an individual for MXN 50,000 a month plus MXN 8,000 of VAT. It withholds the VAT allowed by the regulations and pays it over to the SAT by the 17th of the following month. / Monthly rent of about USD 2,702 with VAT of about USD 432 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Arts. 1o.-A and 6o., 1978-12-29 official text · verified 2026-10-26

7. Refunds within 40 days. When a refund is claimed with all required data, including the bank account details, the SAT must pay within 40 days of the claim. It may, within 20 days, require additional data or documents, which suspends the term until the taxpayer answers; it may also start an audit to verify the claim.
Cost to do it: No fee. The cost is the time value of money while the refund is pending and the risk of an audit.
Example: An exporter files a refund claim for a MXN 2,500,000 VAT balance with complete documentation. If the SAT does not issue a request in the first 20 days, it should pay within 40 days. / Refund of about USD 135,116 at 18.5026.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (Chamber of Deputies consolidated text, last reform DOF 9 April 2026), Art. 22, 1981-12-31 official text · verified 2026-10-26

8. VAT on imports and the IMMEX certification. Importing goods, acquiring intangibles from foreign residents, using intangibles or tangible goods provided from abroad, and using in Mexico services listed in the law that are provided from abroad are imports subject to VAT. On imported goods, VAT is 16 percent of the customs value plus the import duty and other import charges, paid with the import duty and creditable later. Companies that bring goods in under IMMEX, bonded vehicle assembly or strategic bonded zone regimes can obtain an SAT certification, valid one year and renewable within the 30 days before expiry, that gives a tax credit equal to 100 percent of the import VAT, so the VAT does not have to be paid in cash.
Cost to do it: 16 percent of the duty paid value, a cash cost until credited, except for certified IMMEX companies.
Example: A manufacturer imports machinery with a customs value of MXN 10,000,000 and a 5 percent duty. VAT is 16 percent of MXN 10,500,000 plus other charges, about MXN 1,680,000, payable at customs and creditable in the monthly return. / Machinery of about USD 540,465; import VAT of about USD 90,798 at 18.5026.Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (Chamber of Deputies consolidated text, last reform DOF 12 November 2021), Arts. 24, 27, 28 and 28-A, 1978-12-29 official text · verified 2026-10-26

Transaction	VAT treatment	Input VAT recoverable	Rule
Domestic sale of goods or services	16 percent	Yes	LIVA art. 1o.
Unprocessed food, medicines, listed farm machinery	0 percent	Yes	LIVA art. 2o.-A
Export of goods; technical assistance or advertising used abroad	0 percent	Yes	LIVA art. 29
Sale of land or housing	Exempt	No	LIVA art. 9o.
Sale of shares	Exempt	No	LIVA art. 9o., section VII
Import of goods	16 percent on duty paid value	Yes, or 100 percent credit if IMMEX certified	LIVA arts. 27 and 28-A
Sales from registered premises in the border regions	8 percent effective	Yes	Border decrees, through 31 December 2026

How Mexican VAT treats common transactions, verified 26 October 2026

Worked example

A Mexican contract manufacturer sells MXN 30,000,000 of products in Mexico (VAT MXN 4,800,000) and exports MXN 70,000,000 at 0 percent in 2026, about USD 5.4 million in total sales.
It pays MXN 6,000,000 of VAT on materials, services and imports, all deductible, invoiced and paid. Its net position for the year is a balance in its favor of MXN 1,200,000 (about USD 64,856), because export sales generate no output VAT.
It files a refund claim with complete documentation; the SAT must pay within 40 days unless it requests more information or opens an audit. If it imports under IMMEX with SAT certification, the import VAT is covered by a 100 percent credit instead of cash.

Step by step

1. Register for VAT when registering in the RFC and issue CFDI that show VAT separately.
2. Map each revenue stream to 16 percent, 0 percent or exempt; exempt sales cut the share of input VAT you can credit.
3. Before crediting VAT, confirm the expense is deductible for income tax, the CFDI shows VAT and the invoice has been paid.
4. For specialized services or works, collect the contractor's labor registration and VAT return and payment receipt by the end of the month after payment.
5. File and pay monthly by the 17th; if in a refund position, file a complete refund claim with bank details and respond to any request quickly.
6. Importers with large volumes should evaluate IMMEX and the VAT certification to avoid paying import VAT in cash.

Common traps

Treating 0 percent and exempt as the same. Exempt sales lose input VAT credit; 0 percent sales keep it (LIVA arts. 2o.-A and 9o.).
Crediting VAT on non deductible expenses. VAT is creditable only in the proportion the expense is deductible for income tax (LIVA art. 5o., section I).
Missing contractor documentation on specialized services. The credit must be reversed if the paperwork is not obtained in time (LIVA art. 5o., section II).
Asking for part of a refund. A refund claim must cover the full balance in favor (LIVA art. 6o.).
Forgetting VAT on imported services and intangibles. Using foreign services and intangibles in Mexico is an import subject to VAT (LIVA art. 24).

Sources

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