Mexico introduced its value-added tax (VAT) system, known locally as Impuesto al Valor Agregado (IVA), in 1980 as part of a broader tax reform aimed at modernising the federal tax system. Mexico’s VAT framework is established at the federal level and applies uniformly across the country, with limited regional rate variations.
Mexican VAT is governed primarily by the Value Added Tax Law (Ley del Impuesto al Valor Agregado) and related regulations, and is administered by the Servicio de Administración Tributaria (SAT), Mexico’s federal tax authority. The SAT is responsible for issuing administrative guidance, managing VAT registrations and filings, overseeing electronic invoicing and reporting, and enforcing compliance with Mexican VAT law.
Businesses carrying out taxable activities in Mexico — whether resident or nonresident — must comply with Mexican VAT obligations. This includes registering for VAT when required, applying the appropriate VAT rates, issuing SAT-compliant electronic invoices (CFDI), maintaining accounting and tax records, and filing periodic VAT returns in accordance with Mexican tax rules.
