The Current Fiscal Imbalance and its Impact on Bookstores
Gerardo Jaramillo, president of the Association of Bookstores of Mexico (Almac), highlights a pressing issue: an average of 10 bookstores close each year over the past decade. The existing fiscal disparity must be addressed, particularly in the upcoming tax reform.
IVA Laws and Regulations
Article 2 of Mexico’s Value-Added Tax (VAT) Law states that a zero percent (0%) VAT rate applies to books, newspapers, and periodicals produced by the taxpayers themselves. However, materials accompanying books that cannot be separately commercialized are also subject to VAT.
History of VAT on Books
The zero VAT rate for books was established in the 1980 VAT Law, but administrations have repeatedly attempted to impose VAT on book publishers and manufacturers. A notable case occurred in 2002, threatening a 15% VAT on books.
The Divide Between Publishers and Booksellers
Booksellers acquire new titles tax-free but must sell them at fixed prices, unable to adjust due to a single pricing policy in the country. Crucially, booksellers must absorb VAT costs for their commercial activities, affecting the profitability of independent and neighborhood bookstores, as per Claudia Bautista, president of the Independent Bookstores Network (Reli).
2026: A Pivotal Year for Zero VAT on Bookstores
Jaramillo explains that modifying this rule is a priority for bookstores in 2026, as an initiative from the Senate’s Cultural Commission aims to achieve this goal. Almac, Reli, and other stakeholders have met with the Cultural, Education, and Finance Commissions, as well as Paco Ignacio Taibo II (FCE director) representing editorial policy.
The Urgency of Legislating Zero VAT for Bookstores
Almac and Reli released a study on bookstore conditions, revealing a 32% decrease in active bookstores from 18,571 in 2003 to 12,507 in 2023. This reduction represents one-third of bookstores over two decades.
Impact on Bookstores
Jaramillo emphasizes the urgency: “We’ve lost over 400 bookstores from 2003 to 2024, regardless of size or type. The issue is a general closure problem tied to financial viability.”
Benefits of Zero VAT for Bookstores
Jaramillo advocates for zero VAT as a democratic instrument allowing any bookstore—small, medium, or large—to claim VAT and recover all paid service costs by year’s end.
- Small bookstores: Guarantee rent or employee wages, pay suppliers, or expand marketing campaigns.
- Medium bookstores: Improve inventory control or display and sales systems.
- Large bookstores: Open more stores.
The goal is to include this law in the 2027 tax reform, close to September.
Understanding Zero VAT
There are differences between zero VAT on the VAT and exemption from this tax. Zero VAT refunds the tax amount to the tax authority, while exempt goods do not receive a refund.
