Background on the Instituto para la Protección al Ahorro Bancario (IPAB)
The Instituto para la Protección al Ahorro Bancario (IPAB) is a Mexican financial institution established to protect bank depositors. It was created following the 1994-1995 financial crisis, which led to the collapse of several banks and left many depositors without their savings. The IPAB was designed to prevent similar situations from happening again by ensuring the stability and solvency of the banking system.
Government’s Proposal to End Tax Deductions for Bank Contributions
Édgar Amador, Mexico’s Secretary of Hacienda and Credit Publico (SHCP), announced a proposal to eliminate tax deductions for bank contributions to the IPAB. This change is part of the 2026 Income Tax Law initiative and aims to align Mexico’s regulations with those of other countries, such as the United States and Canada.
Current Situation and International Harmonization
Currently, Mexican banks can deduct their IPAB contributions from their taxable income. However, Amador explained that this practice is not common in other countries. In the United States and Canada, for example, contributions to equivalent institutions are not tax-deductible.
“What we are doing is harmonizing our regulations with international standards,” Amador said during a press conference detailing the 2026 Economic Package.
Impact on Mexican Banks
Mexican banks, many of which are international entities with concurrent tax legislations in their operating countries, will be affected by this change. Amador emphasized that the proposal aims to create consistency in tax regulations without causing significant disruptions for these banks.
Antonio Martínez, head of the Servicio de Administración Tributaria (SAT), added that the estimated annual revenue from this measure is around 10,000 million pesos. He clarified that the bank contributions to the IPAB, intended for financial sector bailouts, are not linked to income-generating activities and thus should not be tax-deductible.
Details of the Proposed Changes
The 2026 Income Tax Law initiative suggests that, during the upcoming fiscal year, two-thirds of the contributions made by multiple-bank institutions to the IPAB will no longer be tax-deductible.
- This change aims to prevent abuses in tax deductions for expenditures that reduce the tax base but do not directly contribute to generating bank income.
- The Ley de Protección al Ahorro Bancario mandates that banks pay a portion of their earnings to the IPAB, creating a protection system for users’ deposits.
- The IPAB can use two-thirds of these contributions to complete programs and settle operations, originally managed by the now-defunct Fobaproa.
- These contributions are not general obligations or payments to the state; only multiple-bank institutions are required to make these payments.
- The majority of these contributions support the financial system’s sanitation through bank bailouts, as seen with Fobaproa.
New Obligations for Collective Financing Institutions
In addition to the changes for banks, the initiative proposes that Instituciones de Financiamiento Colectivo (IFC) will be obligated to withhold and remit income tax (ISR) and value-added tax (IVA) corresponding to their intermediary operations.
“This obligation will apply to individuals, legal entities, or foreign residents,” the document states.
Key Questions and Answers
- What is the IPAB, and why was this proposal made? The IPAB is a Mexican institution created to protect bank depositors. This proposal aims to harmonize Mexico’s regulations with international standards, similar to those in the United States and Canada.
- Which banks are affected by this change? Multiple-bank institutions in Mexico will be impacted, as they are the only entities required to make contributions to the IPAB.
- What is the estimated annual revenue from this measure? The SAT estimates around 10,000 million pesos will be generated annually from this change.
- What are the new obligations for Collective Financing Institutions (IFC)? IFCs will now be required to withhold and remit income tax (ISR) and value-added tax (IVA) for their intermediary operations.
