VAT in Mexico: general, border and zero rates
Understand Mexico’s 16% general VAT, the border-region incentive that can produce 8%, and why zero-rated is not exempt.
Mexico’s general VAT (IVA) rate is 16%. A fiscal incentive for qualifying taxpayers and transactions in designated border regions applies a 50% tax credit against that rate, resulting in 8%; it is not an automatic nationwide reduced rate.
At 16%, a net price of 1,000 produces VAT of 160 and a total of 1,160. To extract VAT, divide 1160 / 1.16 = 1000.
At an applicable 8% border rate, the same net price produces 80 in VAT and a total of 1,080.
Zero-rated treatment does not mean “irrelevant for tax.” A zero-rated transaction can have reporting and input-tax consequences that differ from an exempt transaction. Confirm eligibility, location, registration and product classification with SAT or a qualified adviser.
Use the VAT calculator for arithmetic. SAT explains the border-region incentive and resulting 8% rate.