Mexico: VAT Reduction of 50% in the Northern Border Region

The Mexican Government has created a fiscal stimulus plan for the northern border region that is based on a 50% VAT reduction for certain transakctions.


What it is

The 50% VAT reduction has been created to attract investments in the northern border region. The goal of the measure is to make the region more competitive and reactivate the regional economy. Thus, new jobs should be created which will raise the tax revenues. Consequently, the improved economic conditions should attract investments which will make the region more attractive to tourist which in turn will benefit small and medium companies.


Who profits from it

The VAT reduction applies to taxpayers (natural and legal persons) that reside in the norther border region engaging in the following economic activities:

  • Processing of goods
  • Offering independent services
  • Offering the temporary use of goods


The reduction does not apply to:

  • The sale of real estate and other immaterial assets
  • The supply of digital contents

Taxpayers who the new regulations apply to will be published in a list of the SAT portal.


How the application process works

Taxpayers need to apply for the tax incentive within 30 days after the new regulation becomes effective. Companies have to request the registration into the taxpayer register together with the message from the SAT.


The application process consist of four steps:

  1. Open SAT portal and enter taxpayer „aclaracion“.
  2. Start “mi portal” session and enter RFC and password (in case this is not available it can be requested or re-set here).
  3. Fill out messaging service and select internet service „Solicitud“. Select „Tramite“ for Estimulo IVA Zona Fronteriza (Stimulating IVA for the border region) and add supporting documents.
  4. Confirmation will be issued and has to be archived for further administrative processes.


These regulatory changes could affect your business with view to customizing or support of your ERP/SAP system. Please contact us to learn about possible necessary reactions to the changes – we are happy to assist you!