Background on the Issue
In Mexico, there has been a long-standing disagreement between insurance companies and the tax authority (SAT) over the interpretation of the Value-Added Tax (VAT) law regarding the reimbursement of damages in insurance cases. Insurance companies had been claiming VAT paid to hospitals or car repair shops as their own, which allowed them to reduce their tax payments.
However, the tax authority maintained that hospitals and repair shops were the rightful claimants of this VAT. This discrepancy led insurance companies to not pay around 175,000 to 200,000 million pesos in taxes annually based on their interpretation of the VAT law.
The New Agreement
In the Federal Tax Law (LIF) 2026, the Congress approved fraction XIV of article 25, stating that starting from now, the VAT for reimbursements or damage compensations for insured parties will no longer be claimable. This agreement aims to resolve the disagreement between insurance companies and the tax authority.
Under this new regulation, insurance companies will have to start paying the VAT from 2025 onwards, covering any unpaid taxes from 2024 and earlier.
Impact on Insurance Prices: CONDUSEF Perspective
Óscar Rosado Jiménez, the president of CONDUSEF, acknowledged during a press conference by the Mexican Association of Insurance Institutions (AMIS) that this new tax disposition “may impact” the insurance sector and policy prices. He emphasized that it is a fiscal matter decided by SAT and insurance companies, adding that the consequences will become clearer once we reach January 2026.
Rosado Jiménez clarified that CONDUSEF will not address user complaints regarding potential price increases, as the organization only handles cases related to service compliance. He stressed that market forces determine insurance prices, and there is no price control for financial products.
The Mexican Association of Financial Executives (IMEF) previously warned that the new tax regulation would increase insurance prices for consumers and slow down processes due to the inability to claim VAT.
AMIS’s Positive Outlook
Pedro Pacheco, the president of AMIS, highlighted that this new tax disposition provides legal certainty for insurance companies concerning a long-standing ambiguous criterium.
Pacheco explained that the change in law offers clarity to the insurance sector, which had been operating under uncertainty for several years. He reiterated that the insurance industry will respect and adhere to the new legal requirements.
Key Questions and Answers
- What is the new tax regulation about? The new regulation, approved in the Federal Tax Law 2026, states that insurance companies can no longer claim VAT for reimbursements or damage compensations for insured parties.
- How will this affect insurance prices? CONDUSEF’s president, Óscar Rosado Jiménez, mentioned that the new disposition “may impact” insurance prices, though it remains to be seen how things will unfold by January 2026. AMIS’s president, Pedro Pacheco, emphasized that the insurance sector will respect and adhere to the new legal requirements.
- What does this mean for consumers? Market forces determine insurance prices, and there is no price control for financial products. CONDUSEF will not address user complaints regarding potential price increases, as the organization only handles cases related to service compliance.
- When does this new regulation take effect? The new tax regulation will require insurance companies to start paying VAT from 2025, covering any unpaid taxes from 2024 and earlier.
