The Mexican government’s plans to increase the tax burden on digitally operating companies have caused concern among major industry players, including Mercado Libre. The company projects that the proposal could directly impact e-commerce growth, affect thousands of SMEs that use online channels, and ultimately lead to product price increases for consumers. The digital platform also warned that the measure could reduce its investment intentions for the coming year.
The governmental proposal, included in President Claudia Sheinbaum’s Economic Package 2026, is currently under debate in the Chamber of Deputies. The initiative seeks to introduce a requirement for marketplaces to withhold taxes equivalent to 10.5% of all transactions made by corporate entities using their channels: 2.5% for Income Tax (ISR) and 8% for Value-Added Tax (IVA).
This mechanism is expected to substantially and immediately increase public revenue, but at the expense of seller cash flow. Alehira Orozco, Director of Government Relations, Mercado Libre, summarized the potential consequences: “We are going to see two important phenomena: SMEs that stop selling online and prefer channels in the physical world, where there is no traceability, and an increase in prices as a response from other companies that sell with us.”
Mercado Libre, which shares most of the Mexican e-commerce market with Amazon, is the only company to publicly object to the plan. It argues that the business of SMEs, which are crucial to its operation, will face the most pressure due to limited profit margins and low capacity to maintain liquidity without constant cash injections. While retentions generate a tax credit that can be recovered later, these refunds are often slow and bureaucratic; for example, IVA surpluses are returned monthly, and ISR surpluses are returned annually, raising immediate liquidity concerns.
The company presented a counterproposal to financial and legislative authorities, suggesting a retention rate of 1% for the ISR and 2% for the IVA, considering that companies already have existing fiscal obligations. However, it acknowledged that conversations have not been productive.
“If our sellers sell less, Mercado Libre sells less. And obviously, that has an impact even on the company’s investment plans,” Orozco stated. She recalled that the company announced a US$3.4 billion (MX$62 billion) investment plan for its Mexican operations this year. “If this goes through, those future investments will probably also be diminished,” she warned, noting that the company’s investment is necessary to expand its logistics network and distribution centers.
A setback for the e-commerce sector could undermine the government’s intentions. The budget for next year is built on the premise of higher tax collection without introducing new direct taxes to consumers. However, the anticipated tax increase is expected to be passed down to final buyers through higher prices in an inflationary context. Furthermore, a slowdown in activity could jeopardize foreign direct investment, which is essential for job creation and consumption. Mexico is considered the second largest in Latin America for e-commerce, with retail sales valued at MX$789.7 billion in 2024, a 20% annual increase, according to the Mexican Association of Online Sales (AMVO).
The fiscal proposal has also reignited a dispute within the sector. Platforms with legal incorporation in Mexico have argued that competitors dispatching directly from abroad, such as Chinese companies Temu or Shein, are exempt from local taxes, allowing them to offer lower prices.
