Background on the Situation
The Asociación Mexicana de Instituciones de Seguros (AMIS) has announced that insurance companies in Mexico will strictly comply with the amendments made to the Ley de Ingresos de la Federación (LIF) 2026. These changes will prevent insurers from accrediting the Value Added Tax (VAT) of third parties, as per a recent modification to the LIF 2026.
Historical Context
In recent years, insurance companies in Mexico have been embroiled in tax disputes with the government over the criteria for accrediting VAT paid to third parties when repairing or compensating policyholders for insurance claims. The government maintained that insurers should pay this VAT to the tax authority.
Key Changes in LIF 2026
On Friday, Mexican lawmakers approved fraction XIV of article 25 in the LIF 2026, stating that VAT will no longer be accreditable for the replacement of goods or damage compensation for policyholders. This change aims to clarify the criteria for processing insurance claims.
Furthermore, any VAT accreditations made in 2025 will be compensated by the SAT (Mexican tax authority). This resolution comes after insurance companies disagreed with the government’s stance on VAT accreditation for third-party charges related to insurance claims.
Insurance Companies’ Commitment
The AMIS emphasized that Mexican insurance companies have always been compliant with existing laws and regulations. They reaffirmed their commitment to adhering strictly to all approved dispositions, including the recent amendments that ensure and strengthen proper compliance with insurance companies’ obligations.
Impact on Insurance Companies
With these changes, insurance companies will no longer be able to accredit VAT from third parties starting from 2025. However, they will be required to pay the appropriate VAT amounts according to the new disposition beginning this year.
As part of a recent agreement, the tax authority has forgiven insurance companies any past or pending VAT claims totaling between 175,000 and 200,000 million pesos, dating back to 2024.
Key Questions and Answers
- What changes have been made to the LIF 2026? The LIF 2026 now explicitly states that insurance companies cannot accredit VAT from third parties for goods replacement or damage compensation to policyholders.
- Why were these changes implemented? These amendments aim to clarify the criteria for processing insurance claims and resolve ongoing tax disputes between insurers and the government.
- How will these changes affect insurance companies? Starting in 2025, insurance companies must pay the appropriate VAT amounts for claims, whereas previously they could accredit third-party VAT.
- What was the outcome of the tax disputes? The government forgave insurance companies any past or pending VAT claims totaling between 175,000 and 200,000 million pesos, resolving the disputes.
