The 2027 Budget Is a Corporate Tax Hike. Hacienda Just Won't Call It One.

Hacienda delivered the 2027 Paquete Economico to Congress on Tuesday with two promises that cannot both be true as stated. The first: no new taxes and no rate increases. The second: tax revenue at a record 15.9% of GDP, up 5.9% in real terms, in a year the same document expects the economy to grow 2.0%. Income tax alone is budgeted to rise 7.2% in real terms. Through July of this year it has fallen 6.0%.

The bridge between those numbers is in the miscelanea fiscal, and it is a corporate tax increase in everything but name. Every company with more than MXN 50mm in revenue loses 1% of its deductions, can use only half its tax losses in any given year, and can deduct net interest up to 20% of adjusted taxable profit instead of 30%. None of that touches a rate. All of it raises the bill. The English-language coverage has filed the package under “prudent, no surprises.” That is a read of the deficit line. The sector effects live in the mechanism underneath it.

The consolidation is a revenue bet, not a spending cut

The broad deficit, the requerimientos financieros del sector publico, is budgeted at 3.9% of GDP for 2027 against 4.1% this year. The narrower budget balance goes from 3.6% to 3.4%. The primary surplus is 0.6% of GDP. Net spending is MXN 10.5trn, up 0.7% in real terms against this year’s approved budget. That is a third consecutive year of consolidation on paper, and the peso, at 16.89 per dollar the day after the package landed, did not object.

Look at how the two-tenths of a point is funded. Spending barely moves, and the parts of it that can move are small. Personnel, pensions, debt service, and transfers to the states take 66.5 of every 100 pesos in the budget, and subsidies and transfers another 12.4. Pensions alone are MXN 1.84trn, a quarter of programmable spending. The only real cut is the one to Pemex, which we come to below. The consolidation therefore rests almost entirely on the revenue side: MXN 6.26trn of tax collection, 15.9% of GDP, with no new tax and no rate change.

Hacienda’s record on its own targets is the reason to check the bet. The 2025 broad deficit was approved at 3.9% of GDP, revised to 4.3% by April, and closed at 4.8%. Banamex already has 2026 at 4.3% against the 4.1% target and puts 2027 at 4.1%, not 3.9%. Monex models tax revenue growing 3.9% in real terms next year, not 5.9%, and growth of 1.8% rather than 2.0%. The growth assumption for this year was cut in the same package, from a range of 1.8% to 2.8% to one of 1.0% to 2.0%. A target that has income tax swinging from minus 6.0% to plus 7.2% in twelve months, on slower growth, needs a mechanism. It has one.

The 1% that is really 29%

The mechanism is a deduction cap that reads like a rounding rule and works like a levy. For any company with revenue above MXN 50mm, authorized deductions are multiplied by a factor of 0.99. If deductions already exceed 96.67% of revenue, they are capped there. The 1% that is disallowed can be carried forward for twenty years, so Hacienda describes it as a timing difference. For a company that is profitable every year it is a permanent haircut, because next year’s 1% arrives before last year’s is ever recovered.

The rule does not fall evenly, and that is the part investors need. Disallowing 1% of deductions adds roughly 1% of costs to taxable income, and at the 30% corporate rate that is a charge of about 0.3% of revenue, whoever you are. What differs is the base it is measured against. For a company with a 20% pre-tax margin, an extra 0.8 points of taxable income is a 4.0% increase in the income-tax bill. At a 10% margin it is 9.0%. At a 5% margin it is 19.0%. At the 3.33% margin that sits right on the 96.67% threshold, it is a 29.0% increase in tax paid. The rule is a flat charge on revenue disguised as a proportional one on profit, and it taxes low margins hardest.

That inverts the story Hacienda tells about it. The stated target is the “9 of every 10 companies” that pay little or no income tax, and the 60.7% of the 524,000 firms with positive income that paid no ISR in 2025. Some of those are the invoicing schemes the package also targets with new anti-EFOS powers for the tax authority. Many are businesses with thin margins: retail, wholesale distribution, construction contractors, auto-parts suppliers, airlines. A rule keyed to deductions as a share of revenue cannot tell the two apart. It charges both.

The other two measures compound it for specific balance sheets. Tax losses can now offset only 50% of a year’s taxable profit, so a company emerging from a loss period pays cash tax on half its recovery even with losses in the bank. Net interest is deductible up to 20% of adjusted taxable profit instead of 30%, which for a leveraged company turns part of its coupon into a non-deductible expense. The Regimen Opcional para Grupos de Sociedades, which let conglomerates defer income tax across subsidiaries for up to three years, is abolished from January 1, 2027, with the deferred tax due by December 31. Hacienda provided no revenue estimate for any of the four measures, which the law requires it to do, and which is the single most telling omission in the package.

Debt service now outspends investment by half

The revenue side has to work this hard because of the other side of the ledger. The cost of the public debt for 2027 is MXN 1.575trn, 4.0% of GDP, up 11.8% in real terms against this year’s expected outturn and equal to 17.2% of budget revenue, the highest share since 1999. Physical investment is MXN 1.027trn, 2.6% of GDP. The federal government will pay bondholders 1.53 times what it spends building things. The medium-term path has investment sliding toward 1.5% of GDP by 2032 as the interest line keeps growing.

That number is also the fiscal side of the argument we made in “Inflation Hit Target. Banxico Won’t Move. The Peso Is the Reason.” A ten-year MBono at 9.31% is a 4.0%-of-GDP interest bill. Every hundred basis points Banxico does not cut is real money in this budget, and the budget assumes a 28-day Cetes rate of 6.0% for 2027 against a policy rate of 6.50% today, which is a cut the central bank has not signaled. The debt stock itself, on the broad measure, goes from 54.0% of GDP this year to 55.0% next and to 56.5% by 2031, the highest since 1990 and, on Banamex’s math, past 60% if the peso were to slip to 19.4.

This is the section the rating agencies will read. Moody’s cut Mexico to Baa3 on May 20 with a stable outlook, one notch above speculative. S&P moved its BBB outlook to negative on May 12. Fitch reaffirmed BBB- in July. All three named the same list: low growth, rigid spending, persistent deficits, and Pemex. The package answers the fourth and hands the bill for the other three to the corporate sector.

Pemex gets 69% less, and a surplus it has to earn

The one real spending cut is the transfer to Pemex. The 2027 patrimonial contribution for debt service is MXN 81.1bn (~USD 4.5bn at 18.0 MXN/USD), down from MXN 263.5bn approved for 2026, a 69% reduction. Against that, Hacienda budgets a MXN 95.1bn financial surplus at Pemex next year. We wrote in “Pemex Called Petrobras. That Tells You Everything About Mexico’s Oil Problem.” that the company’s structural issue is a cost base sized for a producer it no longer is. The package changes the price deck and the production assumption, not the cost base.

The 2027 framework prices the Mexican mix at USD 61.8 per barrel against an estimated USD 78.4 for this year, a price the war premium of the spring handed the treasury and that the budget now assumes goes away. Oil revenue falls 14.4% in real terms to MXN 984.5bn, 2.5% of GDP. Liquid-hydrocarbon output is budgeted at 1.8mm barrels per day for the whole country, private operators and condensates included. Pemex’s own July output, before partners and private producers, was around 1.7mm. Pemex has roughly USD 5bn of maturities in 2027. The budget’s answer is a surplus that needs more oil, at a lower price, with less federal cash than in any year of this administration. Miss any one of those and the transfer comes back, and the 3.9% goes with it.

The industry map

Thin-margin operators are the losers nobody named. Food and general retail, wholesale distribution, construction contractors, auto-parts suppliers, and airlines run pre-tax margins in the low single digits to low teens. The 0.99 factor costs them 9% to 29% more in income tax on the arithmetic above. For a supermarket operator at a 4% pre-tax margin, the rule is worth roughly a quarter of the tax line. Nemak, whose volume problem we covered in “Nemak’s 15% Problem: Revenue Up, Profit Down, Volume Hidden,” is exactly the kind of high-revenue, low-margin manufacturer the threshold catches, though maquiladora entities are excluded and its exact exposure depends on which of its Mexican entities file where.

Leveraged consumer and industrial balance sheets pay twice. The interest cap at 20% of adjusted taxable profit bites any company whose net interest runs above a fifth of its tax EBITDA and above the MXN 20mm floor. Restaurant operators, cement, telecom towers, and any operating company carrying acquisition debt fit the description. Debt raised to finance public infrastructure, construction, hydrocarbons, and power or water projects stays outside the rule under the existing law, and the package does not touch that carve-out, so toll roads and airports are not in this group either. Alsea, which we rate undervalued on the strength of its January refinancing, has more interest running through its P&L than most of the consumer sector and is the obvious name to re-check under the new limit. The financial system is exempt from the interest cap, so banks are not in this group.

Loss carriers lose the recovery year. Companies still working through pandemic-era tax losses, which include the airlines and parts of the restaurant sector, now pay cash tax on half of every peso of profit until the losses are used. The carryforward window extends from ten to twenty years, which does not help a company whose losses existed to shield the rebound.

Conglomerates lose the deferral. The group regime’s abolition brings forward deferred income tax by the end of 2027 for every holding company that used it. This is a one-time cash call and a permanent loss of a three-year float.

Consumer staples got a reprieve the market was not pricing. The legislators’ proposal to move alcohol to a per-litre-of-alcohol quota did not make the package. Special taxes on sugary drinks, beer and spirits, tobacco, and high-calorie snacks keep their current rates, with the quotas moving only by the inflation update the law already requires, and Hacienda budgets MXN 264bn from the four categories. For bottlers, brewers, and snack makers that is the best fiscal outcome available, and it arrived quietly.

Rail and health suppliers win the spending side. Passenger trains get MXN 150.9bn of the MXN 560.2bn priority-investment pool, 27 of every 100 pesos, and health spending rises 12.7% in real terms to MXN 1.2trn. Cement, steel, and construction names with rail exposure have the only growing public order book in the country. Pemex’s own suppliers do not: with the transfer cut 69% and a surplus to hit, the payables cycle we flagged in the spring is unlikely to shorten.

Banks sit on the right side of every line. Exempt from the interest cap, withholding on interest paid to individuals down from 0.90% to 0.68%, and a sovereign that has to place 4.0% of GDP in coupons a year, the sector we called peak earnings in “Mexican Banks Just Printed a Record Quarter. The Market Won’t Pay for It.” has nothing in this package to fear.

Anyone with cash offshore gets a 7.5% window. The repatriation regime taxes returning capital at 7.5% with no deductions, if it is back by December 31, 2027 and invested in Mexico for three years. That is the package’s one carrot, aimed at the same owners the deduction rules hit.

The bottom line

The 2027 budget is credible on the deficit line because it is aggressive on the revenue line, and the revenue line is a corporate tax increase whose cost Hacienda has declined to quantify. The rates did not move. The deduction base did, and a 1% haircut is a 29% tax increase at the bottom of the margin table and a 4% one at the top. That is the sector call: thin-margin retail, distribution, autoparts, and airlines carry the consolidation, leveraged consumer names carry it twice, and staples, banks, and rail contractors got through untouched or better. We expect Congress, where Morena holds the votes, to pass the package close to as written by mid-November. We also expect the ISR growth assumption to miss, because it is missing this year by a widening margin, and the difference to show up as a broad deficit nearer Banamex’s 4.1% than Hacienda’s 3.9%. The rating agencies will read it the same way. The peso has already shrugged. The trade is the earnings revisions in the sectors that just discovered the tax they were not told about.

The Investment Case | September 14, 2026

This article is for informational purposes only and does not constitute investment advice. The Investment Case is not a registered investment advisor. Always conduct your own due diligence before making investment decisions.