Double VAT on IMMEX Operations: Mexico's Supreme Court's Questionable Installment Payment Proposal

The proposal by Mexico's Supreme Court of Justice (SCJN) to resolve the controversy surrounding the so-called double VAT on virtual transactions involving IMMEX companies has raised concerns within the export sector, particularly regarding its potential implications for legal certainty, corporate liquidity, and the competitiveness of the manufacturing industry.

In an interview with El Norte, published on November 10, 2026, Gustavo Leal Cueva, partner at Leal Benavides y Cía. and CEO at Fiscalia.com, raised several legal concerns regarding the draft ruling presented by Justice Yasmín Esquivel Mossa. The proposal would recognize an obligation to withhold value-added tax (VAT) on certain sales of goods by nonresident entities, even when those same goods are also subject to VAT upon their definitive importation into Mexico.

The new proposal introduces a mechanism allowing taxpayers to apply monthly payments against withholding obligations arising in subsequent periods. Although intended to alleviate liquidity pressures, Leal Cueva maintains that this approach fails to address the underlying controversy concerning the legal basis for the taxes being assessed.

The Double VAT Controversy

The matter arises from Conflicting Judicial Criteria Case 8/2025, through which the Supreme Court must determine the VAT treatment applicable to certain virtual return transactions conducted under the foreign trade arrangements available to IMMEX companies.

These transactions allow companies to document the return of goods abroad and their subsequent definitive importation without the goods necessarily physically leaving Mexican territory. This mechanism is among the customs facilitation measures used by the export industry to maintain continuity in its manufacturing and commercial operations.

The controversy stems from the position taken by Mexico's Tax Administration Service (SAT), which maintains that, in addition to the VAT payable upon definitive importation, the Mexican purchaser must withhold the VAT arising from the sale of the goods by a nonresident entity.

Under this interpretation, a single commercial transaction sequence gives rise to two distinct tax obligations, compliance with which may impose a considerable financial burden on the companies involved.

According to information published by Grupo Reforma, the SAT is seeking to recover at least MXN 44 billion in VAT withholdings allegedly omitted between 2019 and 2023, in addition to tax assessments issued against specific companies for transactions conducted in earlier fiscal years.

Monthly Installments Do Not Resolve the Legal Issue

One of the principal concerns raised by Leal Cueva relates to the payment application mechanism contemplated in the new draft ruling.

The proposal would allow taxpayers to make monthly payments toward the disputed withholding obligations and apply amounts already paid against obligations arising in subsequent months, thereby reducing the need to make repeated disbursements for the full amount of each obligation.

Regarding this mechanism, Leal Cueva stated during the interview: "Allowing installment payments or permitting amounts paid to be applied against subsequent obligations does not resolve the underlying issue, which creates a double tax burden whose financial justification has yet to be adequately explained. It merely spreads its financial effects over time."

From this perspective, spreading payments over time may provide temporary relief to corporate liquidity, but it does not answer the fundamental question of whether the transactions involved legally give rise to both tax obligations.

The validity of a tax obligation must be established under the statutory provisions governing the taxable event, regardless of any payment facilities that may subsequently be made available.

The Limits of Judicial Authority

Another concern raised during the interview involves the Supreme Court's authority to establish specific mechanisms for complying with tax obligations.

The draft ruling proposes a method for applying payments across tax periods that must be examined in light of Mexico's VAT Law and Federal Tax Code, particularly because the remittance of withheld taxes is subject to specific statutory requirements.

Leal Cueva cautioned that: "The judicial function is to interpret and apply statutory provisions, not to create alternative taxation mechanisms to reconcile the government's revenue-collection interests with the economic consequences of a particular tax interpretation."

This position raises questions about the extent of judicial authority to adjust the effects of court decisions and the limitations imposed by the constitutional principle of tax legality.

Interpreting tax legislation may require harmonizing different statutory provisions. However, this does not necessarily authorize courts to establish new methods for complying with tax obligations without an adequate legislative basis.

The Inconsistency in the Treatment of Virtual Returns

The interview also addressed one of the central issues in the controversy: the interpretation of the legal fiction under which goods physically remaining in Mexico are deemed to have been returned abroad.

The draft ruling recognizes the effects of virtual returns for customs purposes but maintains that, when determining the territoriality of a sale under Article 10 of the VAT Law, the physical location of the goods must prevail.

In Leal Cueva's view, this interpretation requires a legal justification explaining why certain effects of the legal fiction are recognized for purposes of fulfilling customs obligations but disregarded when examining the VAT consequences of the same transaction.

He emphasized that the draft ruling should explain why the legal consequences of a single transaction may be constructed on different legal premises without undermining the coherence of the tax system.

Although customs provisions and the rules governing VAT liability operate within distinct legal frameworks, the transaction must be examined as a whole to determine whether the taxable events identified by the tax authority are actually triggered.

Tax Revenue and Legal Certainty: A Constitutional Balance

The observations made by Gustavo Leal Cueva also addressed the need to uphold the constitutional principles governing taxation.

Article 31, Section IV, of the Political Constitution of the United Mexican States establishes the obligation to contribute to public expenditures in a proportional and equitable manner, as provided by law.

From this perspective, the government's interest in collecting tax revenue must remain within the boundaries established by the legal system. The potential budgetary consequences of a judicial ruling cannot, by themselves, justify the enforcement of a tax obligation.

In this regard, Leal Cueva stated: "The protection of tax revenue must coexist with respect for business activity, legal certainty, and economic competitiveness."

He further emphasized that the purpose of tax justice cannot be limited to identifying mechanisms that enable tax collection without immediately compromising taxpayers' liquidity.

Before establishing the conditions for compliance, it must first be determined whether the obligations sought to be enforced have a sufficient legal basis.

Implications for the Manufacturing Industry

The potential adoption of the proposed judicial interpretation could have consequences for companies involved in pending tax disputes, as well as those maintaining operational structures based on virtual returns of goods.

Beyond the financial impact of outstanding tax assessments, the interpretation ultimately adopted could influence foreign trade planning, transaction documentation, and the assessment of tax contingencies.

For IMMEX companies, it will be important to review the specific characteristics of their transactions, the tax years involved, the provisions in force when the transactions occurred, and the procedural status of any disputed tax assessments.

Such an analysis should consider both the determination of withholding obligations and the effects of import VAT payments, the availability of VAT credits, and the potential financial consequences of the transactions.

A Decision with Implications Beyond the Maquiladora Industry

The controversy before the Supreme Court presents an opportunity to clarify the interpretation of tax provisions applicable to virtual foreign trade transactions. However, it also raises questions regarding the coherence of Mexico's tax system and the limits of judicial authority.

The considerations expressed by Leal Cueva in his interview with El Norte underscore that the resolution of a tax controversy must begin by determining the legality of the taxes being assessed, rather than merely identifying mechanisms that make their collection financially manageable.

Legal certainty requires that taxpayers' obligations be determined and enforced in accordance with applicable statutory provisions, while respecting the constitutional principles governing taxation.

In this context, the Supreme Court's eventual decision could have implications not only for IMMEX companies but also for the predictability of foreign trade operations and investor confidence in the stability of Mexico's legal framework.

Press Reference: Alejandra Mendoza, "Doble IVA a plazos no es la solución" ("Paying Double VAT in Installments Is Not the Solution"), El Norte, November 10, 2026. Interviews with Javier Cendejas, President of COMCE Northeast, and Gustavo Leal Cueva, Managing Partner at Leal Benavides y Cía.

Judicial Proceeding: Supreme Court of Justice of Mexico, Conflicting Judicial Criteria Case 8/2025, under the responsibility of Justice Yasmín Esquivel Mossa.