2027 Tax Reform: Key Approved Amendments to the Income Tax Law
The reform introduces new limits on deductions, tax losses and interest, as well as changes to payments abroad, with implications for corporate tax planning, transfer pricing and cash flow.
The amendments to the Mexican Income Tax Law (LISR), approved by Congress and pending publication in the Official Gazette of the Federation as of November 11, 2026, introduce significant changes for Mexican-resident entities, with an expected effective date of January 1, 2027.
One of the main changes is the introduction of a new Chapter X, establishing a mechanism to control authorized deductions and tax losses for entities with taxable income exceeding MXN 50 million and a taxable profit. The mechanism provides for deduction limits of 99% or 96.67% of income, as applicable, as well as the deferral of non-deducted amounts, subject to the conditions established in the reform.
Other amendments include limiting the offset of prior-year tax losses to 50% of taxable profit, while extending the carryforward period from 10 to 20 years. Additionally, the net interest deduction limit is reduced from 30% to 20% of adjusted taxable profit.
Regarding international taxation, the reform modifies the requirements for deducting payments to foreign residents and the timing of withholding obligations. These changes could affect related-party transactions, transfer pricing documentation and corporate cash flow management.
The analysis also examines potential implications for effective income tax rates, the Capital Contribution Account (CUCA), the Net Tax Profit Account (CUFIN) and estimated tax payments, as well as legal considerations regarding potential challenges.
With the reform expected to take effect in 2027, companies should assess its potential impact on their operations, agreements and 2026 year-end tax decisions, taking into account that its definitive scope will depend on the text published in the Official Gazette.
Read our full Legal Flash News for a detailed analysis of the approved amendments, their practical implications and recommended actions before December 31, 2026.
