Based on the provisions established in the Mexican Federal Revenue Law (MFRL) in force for 2026, which includes amendments to both, the Mexican Income Tax Law (MITL) and the Value Added Tax Law (VATL), the Mexican Tax Authorities (MTA) have incorporated general rules and guidance for their application in the Mexican Tax Rules for 2026 (MTR 2026), published in the Federal Official Gazette on December 28, 2025. 

Below is a summary of our comments on the rules applicable to the financial sector in Mexico:

Crowdfunding Entities

Crowdfunding entities were previously subject to the Mexican Tax Regulations for 2025, which required them, on behalf of their depositors, to fulfill various tax obligations related to withholding and remitting Income Tax (IT), as well as handling Value Added Tax (VAT). These provisions are now incorporated into the MFRL for 2026 and have been repealed from the MTR 2026.

These entities are now required to provide those from whom they have withheld IT and VAT with an invoice that states the amount of nominal interest paid and the tax withheld, including the “Invoice Interest Complement” published by the MTA.

Bad Debt Deductions on Financial Institutions

A natural aspect of any credit institution’s operations is the management of doubtful accounts, bad debt accounts, or global preventive reserves, which have been regulated by the relevant Mexican Financial Authorities, both in their calculation and their impact on financial results.

Traditionally, Financial Institutions, for the purpose of determining their taxable income, were not subject to the general requirements established for tax deductions in accordance with the MITL for legal entities, but rather had specific tax provisions based mainly on the financial rules issued by the National Banking and Securities Commission (“CNBV” per its acronym in Spanish), the regulatory authority for these institutions.

However, the MFRL for 2026 eliminates the possibility of deducting bad debt accounts based on the specific rules established by the CNBV. Therefore, to deduct these accounts for tax purposes, credit institutions must now apply the same rules as any other legal entity, disregarding the nature of banking operations and the volume of transactions handled by banks (e.g., the volume of credit cards operated by these institutions).

This means they must meet various requirements, including: the statute of limitations for the credit; impossibility of collection; a court judgment of debtor bankruptcy; the amount of the credits; with or without mortgage guarantee, among others. This requires the issuance of rules and procedures to allow credit institutions to apply the general provisions of the MITL.

Through the MTR 2026, general rules are issued requiring credit institutions to identify credits, adding up all credits held by the debtor that exceed or do not exceed the equivalent of thirty thousand Investment Units (“UDIS” per its acronym in Spanish). The rules establish different requirements for those that exceed or do not exceed this amount, and distinguishing between individuals engaged in business activities and those under a different tax regime.

For accounts to be deducted that exceed thirty thousand UDIS and provided the institution has sued the debtor and no judgment has been issued within two years, it may be considered that there is an “impossibility of collection,” provided the account is written off in accordance with CNBV regulations.

For individuals under a tax regime other than business activities, practical impossibility of collection can generally be demonstrated if, within one year after default, collection has not been achieved. The rules specify cases in which the debtor must be notified that the tax deduction will be taken so that the debtor includes the equivalent amount as taxable income.

The general rules require credit institutions to inform the MTA, no later than February 15, 2027, of the uncollectible accounts deducted in 2026.

In addition to all other obligations of the financial system to report information to the MTA on interest, share sales, trusts, derivative financial operations, and more, there is now an additional requirement to report, presumably in detail, regarding the bad debt accounts for which a tax deduction was made or will be made.

These limitations on credit institutions’ ability to deduct bad debt accounts will have a significant impact on their operating cash flow and on the determination of both, current and deferred taxes, in their income statements. While until 2025 the tax deduction of bad debt accounts was made in the same year the debtor defaulted, starting in 2026, the deduction will be made, at best, in the following year, two years later, or only when a final judgment of uncollectibility is obtained.

A transitional article of the MTR 2026 allows the deduction of credits granted for which debtors defaulted up to December 31, 2025, regardless of their principal amount at maturity, provided they have not been previously written off. For this purpose, a notice must be submitted no later than February 16, 2026, using Form 11/MFLR, “Notice for credit institutions regarding credits in default up to December 31, 2025,” which must include various information about the debtor, credit amount, date of default, among others.

Insurance Institutions

Due to the MTA’s interpretation that insurance institutions cannot credit the VAT transferred to them when covering certain claims (applicable to years prior to 2025), the MFRL for 2026 establishes a “tax incentive” equivalent to the surcharges and accessories determined or determinable as a result of the non VAT credit indicated.

For these purposes, insurance institutions must request their application no later than January 31, 2026, in writing, subject to certain requirements, including:

1. Submit the request as established in Form 10/MFLR “Request to apply the tax incentive of the Twenty-Eighth Transitory Article of the MFRL” (compliance deadlines and procedures for the MTA’s response are contemplated).
2. Within ten business days following the submission of the request or fulfillment of requirements, the MTA will request that, no later than March 31, 2026, the payment receipt and corresponding returns be attached to demonstrate correction of their tax situation in compliance with the MFRL.

The MFRL essentially “compensates” with a subsidy for the effects of the interpretation criteria that denies VAT crediting to insurers for goods or services received to fulfill obligations to policyholders for certain claims as of December 31, 2024. However, for effects arising from the application of this interpretation for claims covered in 2025, it requires payment, granting an incentive equivalent to 100% of the surcharges that would arise.

1. The procedure to follow when the insurance institution pays in installments is established.
2. The MTA must respond to the request within ten days of submission or, if applicable, upon fulfillment of requirements. The response is not subject to appeal, so it cannot be challenged by the taxpayer.
3. Situations in which the subsidy cannot be requested are established.

Capital Repatriation Regime

The MFRL establishes the option to pay the corresponding tax on legally sourced funds kept outside Mexico until September 8, 2025, applying a 15% tax rate to those funds returned to the country under certain procedures.

General rules are added to the MTR 2026 establishing the procedure to apply this option, including:

1. Submit the “MITL Return for funds from abroad returned or brought into the country” through the MTA portal.
2. The MTA will issue a duly stamped acknowledgment indicating the amount to be paid, payment reference, and validity, which must be paid within fifteen calendar days from the date the funds are returned or brought into the country, via electronic transfer through the credit institution chosen by the taxpayer.
3. If funds are returned in multiple transactions, the procedure must be followed for each transaction.
4. Submit a “Notice of destination of funds from abroad returned or brought into the country”; for funds returned during the first half of 2026, this may be submitted from April 16 and no later than January 31, 2027; for those returned during the second half of 2026, no later than July 31, 2027.

As can be observed, the addition of these tax rules to the MTR 2026, applicable to certain members of the Financial Sector, will affect the development of processes, implementation of tax policies, information gathering, analysis and interpretation, as well as the determination of current and deferred taxes and possibly the cost of certain services and products offered to the market.

At Alvarez & Marsal, Tax Mexico, we have experience and knowledge of the financial sector and the tax and financial regulations applicable to its operations, as well as in the development of information management systems and connectivity between operating systems and the necessary applications for compliance with the relevant tax provisions for entities in the national and international financial sector. We are at your service to assist with tax advice and implementation services.

Our team of experts is available for any questions or comments regarding the content of this document.