Last reviewed: October 2026. This guide is general information, not tax advice. Rules change, so confirm specific cases with a Mexican tax adviser.

IVA in Mexico at a glance

What is IVA in Mexico?

IVA stands for Impuesto al Valor Agregado, which translates as "value added tax". It is the Mexican version of the VAT used across Europe and Latin America, and it is the tax you see added to almost every bill in Mexico, from a restaurant check to an invoice for industrial parts.

The final consumer bears the cost. Businesses act as collectors: each one charges IVA on what it sells, deducts the IVA it paid on what it bought, and sends the difference to the government. Because every step in the supply chain only pays tax on the value it adds, the total collected ends up equal to the rate applied to the final price.

The tax is set by the Ley del Impuesto al Valor Agregado and administered by the SAT, Mexico's tax authority. It is one of the federal government's largest sources of revenue.

Mexico IVA rates in 2026

The 16% general rate

Unless a specific rule says otherwise, every sale of goods, provision of services, rental and import in Mexico is taxed at 16%. Rates have been stable at this level for more than a decade.

The 8% border region rate

The 8% rate isn't written into the IVA law itself. It comes from a presidential decree of tax incentives for the northern and southern border regions, which lets qualifying taxpayers apply 8% directly to their sales in the region instead of 16%. The latest version, published in the Diario Oficial de la Federación on December 31, 2025, extends the incentive through December 31, 2026.

The northern region covers municipalities along the U.S. border, including Tijuana, Mexicali, Ciudad Juárez, Nogales, Nuevo Laredo, Reynosa and Matamoros. The southern region covers municipalities along the Guatemala and Belize borders, including Chetumal and Tapachula.

A few conditions apply, according to the SAT's FAQ on the incentive:

• The business must file a notice with the SAT to use the incentive.
• The goods must be delivered, or the services provided, inside the region. The customer can be located anywhere.
• Some activities are excluded, including sales of real estate and intangibles, digital services and most transport that leaves the region.

Because the decree has to be renewed, check its status each year.

The 0% rate

Article 2-A of the IVA law lists goods taxed at 0%. They include most unprocessed animal and vegetable products, most basic food (prepared food and most beverages other than milk are taxed at 16%), patent medicines, feminine hygiene products and certain agricultural inputs such as tractors and fertilizers. Exports are also taxed at 0%.

Exempt goods and services

Exempt items carry no IVA at all. They include the sale of land and houses, residential rent, medical services provided by doctors, education from accredited schools, books and newspapers, public land transport of people, and certain financial services.

0% vs exempt: why the difference matters

To a shopper, 0% and exempt look identical: no IVA on the receipt. For the business selling the product, they are very different.

This is why exporters, including most manufacturers selling to the U.S., end up with IVA credit balances. They pay 16% on materials, energy and services in Mexico but charge 0% on their exports, so the SAT owes them money. Getting it back is covered in the refund section below.

How IVA works: a worked example

Here is a simple chain with a supplier, a manufacturer and a retailer, all charging the 16% rate. Amounts are in pesos.

The SAT collects 640 pesos in total, which is exactly 16% of the final 4,000-peso price. Each business only paid tax on the value it added.

How to calculate IVA yourself:

• To add IVA to a price: multiply by 1.16. A 1,000-peso price becomes 1,160 pesos.
• To find the IVA inside a price that includes it: divide by 1.16 to get the price before tax, then subtract. 1,160 ÷ 1.16 = 1,000, so the IVA is 160.
• At the 8% rate: multiply by 1.08, or divide by 1.08.

Is there sales tax in Mexico?

There is no separate sales tax in Mexico. IVA does that job. Unlike U.S. sales tax, which is charged only at the final sale and varies by state and city, IVA is charged at every stage of the supply chain at a single national rate, and businesses credit what they paid along the way.

Two other taxes can appear on purchases:

• IEPS (Impuesto Especial sobre Producción y Servicios), an excise tax on specific goods such as fuel, alcohol, tobacco, sugary drinks and high-calorie foods.
• State taxes, mainly the lodging tax on hotel stays, which varies by state.

On prices and receipts, look for two phrases. "IVA incluido" means the tax is already in the price. "+ IVA" means it will be added at the till. Businesses that need to deduct the tax ask for a factura, the electronic invoice known as a CFDI.

IVA for businesses: registration, invoicing and filing

Register with the SAT

Any business selling taxable goods or services in Mexico needs an RFC (Registro Federal de Contribuyentes), the Mexican tax ID. Mexico has no small-business threshold below which IVA doesn't apply, so registration comes first, before the first invoice.

Issue and collect CFDI invoices

Every sale needs a CFDI (Comprobante Fiscal Digital por Internet), an electronic invoice validated by an authorized provider and reported to the SAT. The CFDI shows the price, the IVA charged and both parties' RFCs.

It matters on the buying side too. A business can only credit the IVA it paid if it holds a valid CFDI for the purchase and the purchase was actually paid. No invoice, no credit.

File a monthly return

IVA is calculated and paid monthly. The return for each month is due by the 17th of the following month, so October's IVA is due by November 17. The amount owed is the IVA charged on sales minus the creditable IVA paid on purchases. If the result is negative, the business has a balance in its favor, which it can carry forward against future IVA or claim as a refund.

IVA withholding

In some transactions, the buyer must withhold part of the IVA and pay it to the SAT directly instead of paying it to the seller. Common examples under Article 1-A of the IVA law:

• Companies paying individuals for professional services or for renting property generally withhold two-thirds of the IVA.
• Companies hiring land freight services withhold 4% of the price.
• Digital platforms that sell on behalf of individuals withhold part of the IVA on those sales.

Withholding rules have exceptions and have changed several times, so check the current version with your accountant before setting up supplier payments.

Late payment

Unpaid IVA is adjusted for inflation and carries monthly surcharges (recargos), and the SAT can impose fines on top. Interest builds quickly, so it is cheaper to file on time and correct later than to file late.

IVA on imports

Goods imported into Mexico are subject to 16% IVA, paid at customs together with import duties through the import declaration, known as the pedimento.

The IVA is calculated on more than the invoice price. The base is the customs value of the goods plus the import duty (IGI) and other charges that apply to the import. For example, if a shipment has a customs value of 100,000 pesos and pays 10,000 pesos in duty, the IVA is 16% of 110,000 pesos, or 17,600 pesos.

For a registered business, import IVA isn't a final cost. It can be credited on the monthly return like any other IVA paid, as long as the pedimento is in the company's name. The real cost is cash flow: the money leaves at the border and only comes back weeks later through the return.

IVA for manufacturers: IMMEX and IVA certification

Most foreign manufacturers in Mexico work under IMMEX, the program that lets export manufacturers bring in materials, components and machinery temporarily, process or assemble them, and export the finished goods. Our guide to how IMMEX works covers the program itself.

Since 2015, temporary imports under IMMEX have generally been subject to IVA, just like permanent imports. For a plant importing millions of dollars of components a month, paying 16% in cash at the border and waiting to recover it would tie up a large amount of working capital.

That is what IVA/IEPS certification solves. Certified companies receive a tax credit equal to the IVA on their temporary imports, so no cash changes hands at customs. According to Tetakawi's summary of the rules, the general conditions include:

• Meeting a minimum share of temporary imports that are later exported or returned
• At least 10 workers registered with the social security institute (IMSS)
• A positive SAT tax compliance opinion
• Inventory control systems that track imported materials

Certification comes in three levels, A, AA and AAA, with stricter requirements for the higher levels, such as more years in operation and a larger workforce or machinery base. It must be renewed before it expires.

For companies that don't run their own IMMEX program, the alternatives are working through a contract manufacturer or a shelter company that already holds IMMEX and certification. Our page on contract manufacturing in Mexico compares those options.

How to get an IVA refund in Mexico

Refunds for businesses

A business with an IVA balance in its favor can ask the SAT to pay it back. Exporters file these claims most often, because they charge 0% on exports while paying 16% on their inputs.

The request is filed online through the SAT's portal, with the monthly return, the CFDIs behind the credited IVA, proof of payment, and, for exporters, the export pedimentos. Under Mexico's Federal Tax Code, the SAT has 40 business days from a complete application to pay. In practice, it often asks for more information, and each request pauses the clock, so refunds regularly take several months.

A few habits make refunds faster:

• Keep every purchase CFDI matched to a payment and to the return it was credited on.
• Make sure suppliers are compliant. IVA paid to a supplier on the SAT's list of companies issuing fake invoices will be rejected.
• File smaller, regular refund claims instead of one large claim after a year.
• Answer SAT information requests completely and on time.

Can tourists get an IVA refund?

Mexico has a refund program for foreign tourists, who can request back the IVA paid on goods they take out of the country. The tax ombudsman, PRODECON, was promoting the program in June 2026, according to El Cronista. Purchases need proper invoices, there are minimum amounts, and the claim has to be made before leaving Mexico. Because the operating details change, check the current minimums and how to claim with the SAT or PRODECON before you travel.

IVA on digital services from foreign providers

Since June 1, 2020, foreign companies that sell digital services to users in Mexico, such as streaming, apps, online software and digital platforms, must register with the SAT and charge 16% IVA, even if they have no office in the country. They file monthly and report their Mexican customers to the SAT.

Platforms that act as intermediaries, such as marketplaces and ride-hailing or delivery apps, have extra obligations. When they collect payments for individuals selling through them, they withhold part of the IVA and income tax and pay it to the SAT on the seller's behalf.

Recent changes to IVA in Mexico

The general 16% rate hasn't changed. Check this list again whenever the government publishes its annual tax package in the autumn.

¿Qué es el IVA en México? (Resumen en español)

El IVA (Impuesto al Valor Agregado) es el impuesto al consumo de México. La tasa general es del 16%. En las regiones fronterizas norte y sur, los contribuyentes que cumplen los requisitos aplican una tasa del 8% gracias a un decreto de estímulos fiscales vigente hasta el 31 de diciembre de 2026. Las exportaciones, la mayoría de los alimentos básicos y las medicinas de patente tienen tasa del 0%. Algunos bienes y servicios, como la renta de casa habitación, los servicios médicos y la educación, están exentos.

Las empresas cobran el IVA en sus ventas, acreditan el IVA que pagan en sus compras con un CFDI válido y presentan la declaración mensual a más tardar el día 17 del mes siguiente ante el SAT.

Frequently asked questions

What is IVA in Mexico?

IVA is Mexico's value added tax. Businesses charge it on most sales of goods and services, credit the IVA they pay on their own purchases, and pay the difference to the SAT every month.

What does IVA stand for?

Impuesto al Valor Agregado, which means "value added tax" in English.

What is the IVA rate in Mexico?

The general rate is 16%. Qualifying businesses in the northern and southern border regions charge 8%, and exports, most basic food and medicines are taxed at 0%.

Which areas of Mexico have an 8% IVA rate?

Municipalities in the northern border region, such as Tijuana, Mexicali, Ciudad Juárez, Nogales, Nuevo Laredo, Reynosa and Matamoros, and in the southern border region, such as Chetumal and Tapachula. The business must qualify and file a notice with the SAT, and the incentive currently runs through December 31, 2026.

What is the difference between 0% IVA and exempt?

Neither adds IVA to the price. A business selling at 0% can still recover the IVA it paid on its purchases. An exempt business can't, so that IVA becomes a cost.

Does Mexico have a sales tax?

Not a separate one. IVA works as Mexico's sales tax, at a single national rate. Some goods also carry IEPS, an excise tax, and hotels charge a state lodging tax.

How do I calculate IVA in Mexico?

Multiply the price before tax by 1.16. To find the IVA in a price that already includes it, divide the price by 1.16 and subtract the result from the original price.

Do I pay IVA on imports into Mexico?

Yes. Imports pay 16% IVA at customs, calculated on the customs value plus import duties. Registered businesses can credit it on their monthly return, and certified IMMEX companies receive a credit instead of paying cash.

Can exporters get IVA refunded?

Yes. Exports are taxed at 0%, so exporters usually build up IVA balances in their favor and can ask the SAT for a refund. The legal deadline is 40 business days from a complete application, though requests for information often extend it.

Can tourists get an IVA refund in Mexico?

There is a refund program for foreign tourists on goods taken out of the country, with minimum purchase amounts and invoice requirements. Check the current conditions with the SAT or PRODECON before you travel.

Do foreign companies have to charge IVA in Mexico?

Foreign companies selling digital services to users in Mexico must register and charge 16% IVA. Foreign companies selling goods into Mexico usually don't charge IVA themselves; the importer pays it at customs.

When is the monthly IVA return due?

By the 17th of the following month.

About Southward Advisors

Southward Advisors is a supply chain implementation firm that helps manufacturers move production from Asia to Mexico and other Latin American countries. Founded in 2016 by John Hyatt, the firm has offices in Charlotte, North Carolina, and Mexico City, and works with small and mid-sized companies as well as multinationals.

Southward works on the client's side rather than selling factory space. Its team finds and qualifies suppliers, compares costs and locations, sets up pilot production and helps new operations run efficiently, working alongside each client's tax and customs advisers on IVA, IMMEX and USMCA questions. Its three core services are:

• Nearshore manufacturing in Mexico: feasibility, site selection, supplier vetting, pilot runs and scale-up.
• Sourcing and supply chain development: supplier discovery and qualification, factory assessments and supply chain design.
• Process improvement consulting: lean manufacturing, value stream mapping, changeover reduction and KPI systems.

Recent client results include a Midwest cabinet maker that saved more than $200,000 in tariffs, a Southeast consumer products manufacturer with tariff savings approaching $1 million a year, and a West Coast office furniture maker that saved about $3 million after moving production to Mexico. You can read the details in our case studies.

Southward Advisors is a member of the US-Mexico Chamber of Commerce, Holland House Mexico, the Irish-Mexican Chamber and the Mexico Strategic Sourcing Alliance, and has been featured on CBS News and Deutsche Welle.