The Number That Decides Your 2027 Cash Flow Is Already in a Return You Filed

On 8 September 2026 the Mexican Executive submitted the 2027 Economic Package to Congress. Inside the bill amending the Income Tax Law (Ley del Impuesto sobre la Renta, LISR) there is a new chapter, Chapter X of Title II, which for the first time imposes a general cap on how much a Mexican company may deduct against its taxable income.

Most of what has been published so far describes the cap. This guide does something else: it puts numbers on it, identifies two construction defects nobody has discussed, and separates the decisions you make now from the decisions you make once the law passes.

The starting point is this. If your Mexican entity has taxable income above 50 million pesos, the size of your 2027 provisional tax payments will not be determined by your 2027 results. It will be determined by a figure that already appears in your most recent annual return as filed: the ratio of your authorized deductions to your taxable income. Depending on which side of 96.67 percent that ratio falls, your profit coefficient gets multiplied by 1.0658 or by 2.6162. The difference between those two factors is measured in tens of millions of pesos of cash.

1. What this is, and what it is not yet

This is a bill. It is not law.

The 2027 Economic Package was submitted on 8 September 2026 and includes, among other documents, the Federal Revenue Law bill for fiscal year 2027 (Ley de Ingresos de la Federación, LIF) and the bill amending, adding to and repealing various provisions of the LISR and other statutes.

Congress may pass it as submitted, amend it, or reject it. Until that happens, none of the rules described here binds anyone.

What is real today is this:

• The text exists, it is public, and it is the text that will be debated. Every quotation in this guide was taken directly from it.
• The bill contains two provisions that measure facts already occurring: one takes as its reference your most recent annual return as filed, and another takes as its reference mergers and spin-offs carried out on or after 8 September 2026. Both are explained in section 10.
• If enacted as submitted, the proposed effective date is 1 January 2027.

On the legislative calendar. The Revenue Law has shorter approval deadlines than the rest of the fiscal package, set out in the Federal Budget and Fiscal Responsibility Law. I am assuming, based on practice in prior years, that substantive debate on Chapter X will take place during October 2026. This guide does not state exact approval dates because the applicable deadline must be checked against the current text of that statute and against the congressional calendar for the session. Verify it before scheduling any decision around it.

2. The threshold: two conditions, not one

Proposed article 78-A reads, in the original Spanish:

«Para efectos del artículo 9 de esta Ley, las personas morales residentes en México que obtengan ingresos acumulables de los señalados en este Título superiores a 50 millones de pesos y determinen utilidad fiscal del ejercicio en términos del citado artículo 9, aplicarán en el ejercicio de que se trate, sus deducciones autorizadas y pérdidas fiscales a que se refiere este Título, conforme a los límites que se establecen en el presente Capítulo.»

In English, and this is our rendering, not an official translation: for purposes of article 9 of the LISR, Mexican resident legal entities that obtain Title II taxable income exceeding 50 million pesos and that determine taxable profit for the year under article 9 shall apply their authorized deductions and tax losses subject to the limits set out in this Chapter.

The two conditions are cumulative, and the second is almost never mentioned:

1. Title II taxable income exceeding 50 million pesos. The text says "exceeding", not "equal to or exceeding". A company with exactly 50 million falls outside.
2. That it determines taxable profit for the year under article 9. A company that reports a tax loss for the year does not apply Chapter X in that year.

The consequence of the second condition runs deeper than it looks, and it returns in section 6: because the regime requires taxable profit to exist, authorized deductions are necessarily smaller than taxable income. That mathematically caps how much the mechanism can disallow.

Statutory profit sharing is carved out. The second paragraph of proposed article 78-A provides that the base for employee profit sharing (participación de los trabajadores en las utilidades, PTU) is determined under article 9, fourth and fifth paragraphs, "sin considerar los límites establecidos en el presente Capítulo", that is, without applying the limits of this Chapter. The cap raises your income tax base but not your PTU base. That is a deliberate and correct drafting choice.

3. Who is excluded: the eight carve-outs

Proposed article 78-E excludes eight categories of taxpayer. We transcribe them because incomplete lists are circulating:

4. The cap: the text and its arithmetic

Proposed article 78-B, section A, sets out two rules depending on where the ratio of deductions to income falls. Call I the year's taxable income and D total authorized deductions.

Fraction I. Where total authorized deductions are less than or equal to taxable income multiplied by 0.9667, the limit on those deductions is total authorized deductions multiplied by 0.9900.

Fraction II. Where total authorized deductions are greater than taxable income multiplied by 0.9667, the limit is that latter figure, that is, 0.9667 × I.

In arithmetic:

• If D ≤ 0.9667 I, the limit is 0.99 D. You lose 1 percent of your deductions.
• If D > 0.9667 I, the limit is 0.9667 I, regardless of how large D is.

The tax floor. This figure is calculated by GP&H Legal; it is not stated in the text. Under fraction II, minimum taxable profit is I minus 0.9667 I, that is, 0.0333 I. Applying the article 9 rate, which the bill does not change:

0.0333 × 30% = 0.999 percent of taxable income

That is the minimum income tax any company falling under fraction II will pay. The calculation is direct and you can replicate it: take your taxable income, multiply by 3.33 percent to obtain minimum taxable profit, and multiply that by 30 percent.

Disallowed deductions are not lost, but they are not tax losses either. Section B of article 78-B allows them to be carried forward for twenty years, indexed for inflation. But it imposes three restrictions that change the value of that asset:

• In each year, the cap is reapplied to the sum of carried-forward deductions plus current-year deductions. It is not a bucket that empties freely.
• The right is personal to the taxpayer that generated it and cannot be transferred, including by merger or spin-off.
• The text is explicit: "Las deducciones pendientes de disminuir en términos de este artículo no se considerarán pérdida fiscal para efectos del artículo 57 de esta Ley." Deductions pending use under this article are not treated as tax losses for purposes of article 57.

That last sentence has accounting and due diligence consequences. If they are not tax losses, they do not follow the article 57 regime, and their treatment as a deferred tax asset has to be analysed separately. We do not offer an accounting conclusion in this guide; we flag it as an open question for your auditor.

5. Finding one: one more peso of deductions can save you 2.9 million

This is the clearest construction defect in Chapter X, and we have not seen it discussed anywhere.

Fraction I says "less than or equal to". Fraction II says "greater than". The exact point D = 0.9667 I therefore falls inside fraction I. And that is where the mechanism breaks.

Compare two identical companies with taxable income of 1,000,000,000 pesos:

6. Finding two: the premise is 10 percent, the mechanism recovers at most 3.33 percent

The explanatory memorandum justifies each of the two thresholds with an enforcement statistic. In the original:

«1. Cuando las deducciones superan el 96.67% de los ingresos acumulables, las erogaciones correspondientes a operaciones realizadas con dichas empresas representan, en promedio, el 10%. Por lo cual, se propone establecer como límite a las deducciones hasta un 96.67%.»

«2. Cuando las deducciones representan menos del 96.67% de los ingresos acumulables, el promedio de gastos con empresas con características de factureras es de 1%, para la mayoría de estas personas contribuyentes. Por lo que, la propuesta es limitar las deducciones en un 99% en estos casos.»

In substance: where deductions exceed 96.67 percent of taxable income, spending with entities bearing the characteristics of invoice mills (factureras) averages 10 percent, which is why the cap is set at 96.67 percent. Where deductions are below 96.67 percent, that spending averages 1 percent, which is why the cap is set at 99 percent.

Both factors come from there. The 99 percent in fraction I corresponds to the observed 1 percent. The 96.67 percent in fraction II corresponds to the threshold at which the authority observes 10 percent.

The problem is that the two mechanisms do not recover what their premises describe.

Under fraction I, the mechanism disallows exactly 1 percent of deductions. Perfect calibration against the 1 percent premise.

Under fraction II, the mechanism disallows D minus 0.9667 I. And here the second condition of article 78-A bites: because the regime applies only to taxpayers that determine taxable profit, D is necessarily less than I. Therefore the disallowed amount is always less than 0.0333 I, that is, less than 3.33 percent of taxable income, and as a proportion of the deductions themselves it approaches 3.33 percent only in the limit where taxable profit approaches zero.

The concrete figures, on income of 1,000,000,000 pesos (GP&H Legal calculation, replicable with the factors in the text):

7. Losses: 50 percent, twice

Proposed article 78-C caps the use of carried-forward tax losses at 50 percent of the year's taxable profit, calculated after applying the article 78-B deduction cap.

The order matters and is not intuitive. First deductions are capped, which raises taxable profit. The 50 percent available for losses is then calculated on that already-inflated profit. So the deduction cap does not only raise your base: it also raises the amount of losses you may use in the year. It is the only effect of Chapter X that works in the taxpayer's favour, and it is limited.

Losses not used because of this cap carry forward twenty years under article 57, subject to the same cap each year. Transitional article SECOND, fraction II, confirms that losses generated before the effective date keep the twenty-year period counted from the year in which they arose.

Proposed article 78-D carries the same 50 percent into provisional payments, applicable to taxpayers whose prior-year taxable income exceeded 50 million pesos. The cash effect therefore starts with the first provisional payment of 2027, not with the annual return filed in 2028.

8. 2027 cash flow: two factors calibrated at a single point

Here is the number in the title.

Transitional article SECOND, fraction I, subsection (a), provides that, for purposes of computing 2027 provisional payments, legal entities with taxable income above 50 million pesos in their most recent annual return as filed adjust their article 14 profit coefficient:

• If in that return D ≤ 0.9667 I: the profit coefficient is multiplied by 1.0658.
• If in that return D > 0.9667 I: the profit coefficient is multiplied by 2.6162.

The transitional provision closes by stating that this fraction does not apply to the taxpayers listed in article 78-E. The eight carve-outs operate here too.

Where those factors come from. The text does not explain. What follows is a GP&H Legal inference, not a statement by the legislature, and we mark it as such:

Let d be the ratio D/I. The current profit coefficient is approximately 1 minus d. Under the new rules, taxable profit would be 1 minus 0.99d under fraction I, and 0.0333 under fraction II. The multiplier converting one into the other is:

• Fraction I: (1 − 0.99d) / (1 − d) = 1.0658 holds exactly when d = 86.81 percent.
• Fraction II: 0.0333 / (1 − d) = 2.6162 holds exactly when d = 98.73 percent, which implies a prior profit coefficient of 1.27 percent.

I am assuming those are the mean or median values of the taxpayer population the authority used to calibrate. Neither the text nor the memorandum says so. If you have the authority's working papers, the inference is unnecessary.

Why this matters. A factor calibrated at a single point and applied to an entire population produces overpayment for some and underpayment for others. On taxable income of 1,000,000,000 pesos, assuming the ratio d holds between 2026 and 2027 (GP&H Legal calculation):

9. What is not in Chapter X, and hits an industrial operator just as hard or harder

Chapter X has absorbed all the attention. But the same bill contains four changes that, for a foreign company with a Mexican plant, intragroup financing and cross-border payments, may weigh more.

9.1. The interest deduction cap drops from 30 to 20 percent

Article 28, fraction XXXII, of the LISR currently caps the deduction of net interest at 30 percent of adjusted taxable profit. The bill amends that paragraph to make the figure 20 percent.

The explanatory memorandum says so expressly: "a efecto de que la tasa para dicha determinación sea del 20%, en lugar del 30% que actualmente establece dicho precepto legal", that is, so that the rate for that determination is 20 percent instead of the 30 percent currently in the provision.

For a Mexican subsidiary partly funded with parent debt, this is probably the most expensive provision in the entire package, and it compounds with Chapter X: interest disallowed by article 28 does not count toward authorized deductions, but it does raise the taxable profit against which the article 78-C loss cap then operates.

9.2. Cross-border payments deduct only when paid and the withholding is remitted

The bill amends article 27, fraction V, to add:

«Tratándose de pagos al extranjero, éstos sólo se podrán deducir en el ejercicio en el que se pague la contraprestación y se entere la retención que corresponda en términos del artículo 153, quinto párrafo, de esta Ley y siempre que el contribuyente proporcione la información a que esté obligado en los términos del artículo 76 de esta Ley.»

In substance: payments abroad may be deducted only in the year in which the consideration is actually paid and the corresponding withholding is remitted under article 153, fifth paragraph, and provided the taxpayer files the information required by article 76.

Three cumulative requirements, and one of them shifts this category of expense from accrual to cash. Royalties, technical assistance, intragroup services and interest paid abroad all become conditional on actual payment and remittance of withholding occurring in the same year as the deduction.

Who answers personally when a withholding is not remitted is the subject of our guide on legal representation in Mexico.

9.3. Prepayments for services and for the use of assets stop being deductible when paid

A third paragraph is added to article 25:

«Tratándose de anticipos por la prestación de servicios y el otorgamiento del uso o goce temporal de bienes, la deducción procederá únicamente en el ejercicio en que se preste el servicio o transcurra el periodo de uso o goce correspondiente.»

In substance: for prepayments relating to services and to the temporary use or enjoyment of assets, the deduction is available only in the year in which the service is rendered or the use period elapses. Where the arrangement spans more than one fiscal year, the deduction is available only for the portion actually received or granted.

Prepaid leases, multi-year licences and prepaid service arrangements all change their deduction timing. The corresponding amendment to article 27, fraction XVIII, confirms that the prepayment rule in that fraction does not apply to these cases.

9.4. The Optional Regime for Corporate Groups is repealed

This has received the least coverage and has the most immediate cash consequences.

Article FIRST of the bill repeals Chapter VI of Title II of the LISR, comprising articles 59 through 71, that is, the optional regime for corporate groups.

Transitional article SECOND, fraction V, sets out the exit mechanism:

• Taxpayers in that regime as of 31 December 2026 must deconsolidate on 1 January 2027.
• Deferred income tax outstanding must be paid no later than 31 December 2027, indexed from the month in which it would otherwise have been due.
• Exception: deferred tax corresponding to the third immediately preceding fiscal year must be paid no later than 31 March 2027.

That last date is the one to put on the board. If your group uses this regime, there is a payment falling due in the first quarter of 2027 and another at year end, both on tax that is currently deferred.

9.5. And one that works in your favour: Plan México immediate depreciation

Transitional article THIRD, section A, fraction I, grants an incentive allowing immediate depreciation of investments in new fixed assets acquired between 1 January 2027 and 30 September 2030, at its own percentages in place of those in articles 34, 35 and 209.

The requirements are demanding: registration and an active tax mailbox, a positive tax compliance opinion, submission of an investment project or a dual-education agreement with the Ministry of Public Education, and a certificate of compliance from an Evaluation Committee. Assets must be held in use for at least two years following the year of deduction, and office furniture and equipment, internal-combustion vehicles, vehicle armouring and non-individually-identifiable fixed assets are excluded. "New" means used for the first time in Mexico.

The connection to Chapter X, and it needs reading carefully. Article 78-E, fraction V, excludes from Chapter X taxpayers applying immediate depreciation of investments or the additional deduction for training expenses, initial certifications, utility models and patent applications. But the exclusion is not general: the text itself confines it to operate "durante la vigencia del beneficio otorgado y exclusivamente respecto a dicho beneficio", that is, during the term of the benefit granted and exclusively in respect of that benefit.

In other words, taking the incentive does not take you out of Chapter X. It takes you out of Chapter X in respect of the benefit, and only while the benefit runs. The opposite reading is circulating, under which applying immediate depreciation removes the taxpayer from the cap for the whole year. The text does not say that.

What does remain open is the mechanics: how the portion of deductions covered by the incentive is isolated within the article 78-B cap computation. The text does not resolve it, and it is among the questions that ought to be addressed in the general rules that proposed article 78-F empowers the Tax Administration Service to issue.

10. The decisions that expire before the law passes

Two provisions of the bill measure facts occurring now, while the law is still under debate.

10.1. Your most recent annual return as filed

Transitional article SECOND, fraction I, does not say "the 2026 return". It says "su última declaración anual presentada", your most recent annual return as filed.

That is the document from which the D/I ratio will be read that determines whether your profit coefficient is multiplied by 1.0658 or by 2.6162. If that ratio falls near 96.67 percent, the difference between one side and the other is the table in section 8.

What this means in practice:

• If you have not yet filed your 2026 annual return, the ratio of authorized deductions to taxable income stops being a compliance data point and becomes a 2027 cash flow data point.
• If you have already filed and the ratio sits near the threshold, it is worth verifying the accuracy of that figure before it becomes relevant to a calculation that did not exist when the return was prepared.
• We are not suggesting amending returns to position yourself on one side of the threshold. That is a different conversation, with a different analysis and different risks, including those under article 32 of the Federal Tax Code and those relating to simulation. What we are saying is that you need to know the number now.

10.2. Mergers and spin-offs on or after 8 September 2026

Transitional article SECOND, fraction III, provides that taxpayers within article 78-A that, on or after 8 September 2026, survive or arise from a merger or spin-off shall apply Chapter X from 1 January 2027, unless they fall within article 78-E, fraction VII.

The date is the date the package was submitted. It is an anti-avoidance rule aimed at anyone attempting to use the five-year carve-out of article 78-E, fraction VI, by creating or restructuring entities between submission and entry into force.

The practical effect: a corporate restructuring closed on or after 8 September 2026 is already being measured by a rule that does not yet exist. If you have a merger or spin-off in progress, the analysis of article 78-E, fraction VII, which preserves the carve-out for the time remaining to the oldest company involved, stops being theoretical.

11. The amnesty programme, and why it is probably not for you

Transitional article Twenty-First of the 2027 Revenue Law bill grants a tax relief incentive. The terms are generous and the exclusions are decisive.

What it grants:

• 100 percent of penalties, surcharges and enforcement costs, for penalties imposed for breaches of tax, customs and foreign trade provisions, including aggravated penalties.
• 90 percent where the final assessment consists exclusively of penalties for breaches of non-payment obligations, and the omitted obligation is remedied.

To whom, and in what circumstances:

Individuals and legal entities whose total income in fiscal year 2025 for income tax purposes did not exceed 300 million pesos, that have final or unchallenged tax assessments outstanding, in three scenarios:

1. Liabilities for 2025 or earlier, filing the relevant returns and paying in a single instalment no later than 31 December 2027.
2. Taxpayers under audit who remedy all detected irregularities and self-correct within the applicable procedural deadline, not later than 31 December 2027.
3. Final assessments not challenged or, if challenged, with withdrawal of the appeal and of any administrative review request.

The deadlines, which are short:

• Application to the Tax Administration Service no later than 31 October 2027. Filing suspends enforcement proceedings without any obligation to post security, and interrupts the statute of limitations.
• The authority issues the payment form within 15 calendar days of the application.
• The taxpayer pays within 15 calendar days of the form being made available.
• If payment is not made within that period, the form is void and the authority must demand the full assessment.

Payment in kind and offset are not permitted. The incentive is not taxable income and does not give rise to any refund, deduction, offset, credit or favourable balance.

The four exclusions, and the fourth is the one that matters here:

1. Taxpayers against whom a criminal complaint has been filed and an arrest warrant issued, who are bound over for trial, or who have a final conviction for a tax offence. In hydrocarbons matters the complaint alone suffices.
2. Taxpayers published on the lists under articles 49 Bis, 69-B and 69-B Bis of the Federal Tax Code.
3. Certain entities under article 79, fractions XXII, XXIII and XXIV of the LISR, and budget-executing public entities, with a carve-back for upper-secondary and higher education and health services.
4. Taxpayers within the jurisdiction of the Large Taxpayers General Administration under the internal regulations of the Tax Administration Service.

That fourth exclusion, read together with the 300 million peso ceiling on 2025 income, defines the programme: it is not designed for the taxpayer this guide addresses. A company with taxable income above 50 million pesos may or may not be below 300 million, but if it falls within Large Taxpayers jurisdiction it is excluded regardless of income.

How a compliance failure in a regulated lender turns into a tax assessment is the subject of our guide a compliance failure is a tax event.

If you run a group with several Mexican entities, it is worth reviewing entity by entity: a smaller subsidiary, outside the Large Taxpayers register and below the ceiling, may qualify. This is a general observation; Large Taxpayers jurisdiction is determined under the internal regulations of the Tax Administration Service and must be verified case by case.

Withdrawal of an appeal is irreversible. That decision is taken with the substantive analysis of the assessment in hand, not with the amnesty calculator.

12. What this guide does not tell you

Out of candour with the reader, and because a document like this is only useful if its limits are declared:

It does not tell you whether the bill will pass, or in what form. It is a text under debate. Everything above may change.

It does not resolve the maquila split. Article 78-E, fraction III, carves out the maquila operation but leaves domestic sales inside. The text sets no basis for allocating deductions between the two. It is the largest gap in Chapter X for the industrial sector and it currently has no regulatory answer.

It does not resolve the mechanics of the article 78-E, fraction V, carve-out. The text is clear that the exclusion operates only in respect of the benefit and during its term, as explained in section 9.5. What it does not say is how that portion is separated within the article 78-B cap computation.

It contains no case law, because there is none: Chapter X does not yet exist as law and has therefore not been interpreted by the Federal Judiciary or by the Federal Administrative Justice Court. Any document citing you a judicial precedent on article 78-B is citing something that does not exist.

It does not analyse constitutionality. The argument on tax proportionality under article 31, fraction IV, of the Mexican Constitution, applied to a general cap on deductions that operates regardless of whether the expense is strictly indispensable, is real and serious. It requires its own analysis, which does not fit here.

It is not tax advice. The calculations in this guide use simplified assumptions and round figures to make a mechanism visible. Your numbers are different.

It does not cover the rest of the 2027 Economic Package: the Federal Tax Code, the Special Tax on Production and Services Law, the Federal Duties Law, the Customs Law and tariff changes fall outside this document.

What we would do this week if we were you

1. Produce one number: the ratio of authorized deductions to taxable income in your most recent annual return as filed. If it sits between 95 and 99 percent, sections 5 and 8 apply to you directly.
2. If you use the Optional Regime for Corporate Groups, quantify the deferred income tax and separate out the third-preceding-year portion. There is a proposed date in March 2027.
3. If you have intragroup debt, rerun the article 28, fraction XXXII, calculation at 20 percent instead of 30.
4. If you have a merger or spin-off in progress, review transitional article SECOND, fraction III, and article 78-E, fraction VII, before signing.
5. If you are a maquiladora with domestic sales, start documenting now how you allocate deductions. Whatever basis you use will have to be defended.
6. If you have final tax assessments outstanding, check whether any of your entities sits outside Large Taxpayers jurisdiction and below 300 million pesos of 2025 income.

Companion analysis

The 2027 package has five dates that are already running.

Describe your structure in Mexico to us: entities, intragroup debt, payments abroad, mergers or spin-offs in progress. A lawyer tells you which of those dates apply to you and what has to be ready before each one.

A lawyer replies within one business day. Sending this does not create an attorney-client relationship.