Senate Moves Forward with Increases to IEPS and New Fees; 2026 Revenue Package Advances to Full Chamber
The Senate’s Finance and Primary Legislative Studies Committees approved, both in general and particular terms, changes to the IEPS Law (Special Tax on Production and Services), the Federal Rights Law, and the Federal Tax Code, all part of the 2026 Economic Package. The drafts include higher levies on soft drinks, tobacco, and games with betting, as well as the addition of oral rehydration solutions containing sugars or sweeteners and a new tax on video games with violent content. The proposals will go to the full Senate; if passed without changes, the provisions would take effect beginning January 1, 2026, once published in the Official Gazette.
For flavored beverages, the proposed changes would raise the specific tax per liter from 1.64 to 3.08 pesos and expand the tax base to products with added sweeteners, with an additional levy of up to 1.5 pesos per liter. Oral rehydration solutions that contain sugars or sweeteners not aligned with WHO criteria would also be subject to specific taxes. Mexico first implemented the sugary drinks tax in 2014, and academic evidence shows moderate reductions in purchases, especially in lower-income households; a new increase could deepen that health effect, though it could also put pressure on consumer spending and create challenges for small retailers.
For tobacco, the plan is to raise the ad valorem rate from 160% to 200% and to gradually increase the specific tax per cigarette from 0.85 pesos in 2026 to 1.15 pesos by 2030, up from the 0.64 pesos set for 2025. The import or sale of other nicotine products, such as nicotine pouches, would also be taxed at 200%. These measures align with Mexico’s toughening anti-tobacco policies, but could also incentivize illicit markets if customs and health enforcement are not strengthened. The IEPS on tobacco and beverages is a significant component of non-oil revenues, in addition to its corrective taxation role.
The package adds a specific tax on the consumption of video games with intense violence, blood, sexual content, strong language, or real-money gambling, with a rate of up to 8%. At the same time, it raises the IEPS for betting and raffles from 30% to 50%, extending it to those operating online. The government cites public policy goals and compensation for social costs as rationale; the industry, for its part, could face higher compliance costs and price increases, risking user migration to unregulated platforms unless accompanied by technological monitoring and international cooperation.
The Federal Rights Law is set to increase fees for SRE (Foreign Affairs Ministry) services, including a new 294.01-peso charge for authorizing minors to travel abroad. Entry fees for foreign tourists would rise 14.2%, along with updates to museum and archaeological site admissions, and a hike that would double fees for temporary and permanent residency. Fees for the use of radio spectrum for telecommunications and for CNBV (banking regulator) oversight are also updated. These changes are expected to have limited impacts on tourism costs and, in the case of spectrum, could put upward pressure on telecom charges if competition does not absorb them—exactly as demand for connectivity grows due to nearshoring and digitalization.
The drafted reforms to the Federal Tax Code strengthen actions against the issuance of fake invoices and smuggling. New powers for the SAT (tax authority) include home visits with photographic, audio, and video evidence; the ability to restrict digital seals when alleged purchase of fake receipts is not disproven; and denial of RFC registration to individuals linked to simulated invoicing schemes. Access to digital platform information is restricted to tax compliance purposes. Since 2020, Mexico has taxed and withheld taxes on digital platforms; with these measures, the Treasury aims to strengthen collection efficacy and perception of risk for evasion, although debates remain about due process safeguards and privacy.
The committees also approved the 2026 Revenue Law, which estimates total revenue at 10.1 trillion pesos, of which 5.8 trillion (57%) would come from taxes, and 1.2 trillion (12%) from oil revenues. The proposal plans for net indebtedness of 1.7 trillion pesos in domestic debt and $15.5 billion in external debt. Notable adjustments include raising annual withholding on interest from 0.50% to 0.90% applied to the principal generating the interest, withholding 20% of nominal interest for fintech financing, and maintaining or increasing VAT and income tax withholdings on digital platforms and sellers on those platforms. VAT withholding for insurance companies would also begin next year, with no retroactive effect. These changes are intended to bring forward tax collection in an environment of still-high interest rates, but may impact the liquidity of savers and intermediaries, requiring operational adjustments in the fintech ecosystem.
In perspective, the revenue package shifts the burden toward special taxes and fees, and toward increased auditing, aiming to balance public health objectives with fiscal consolidation needs. The inflationary impact would be limited and targeted, but could still be felt in the cost of the everyday consumption basket and regulated services. Implementation will be key: effective oversight to contain informality, regulatory coordination for platforms and online gaming, and meaningful dialogue with productive sectors to avoid unintended effects on investment and competition.
In sum: the full Senate will consider measures to increase IEPS on beverages and tobacco, incorporate new taxes on violent video games and gambling, update administrative fees, and strengthen SAT tax enforcement. If approved, these moves would reinforce recurring revenues in 2026, potentially benefiting public health and curbing evasion, but with distributive and operational costs that will require careful enforcement and ongoing review.
