The reform to the Income Tax (ISR) planned for 2027 could compromise the viability of 1,000 automotive agencies and put 70,000 direct jobs at risk in Mexico, due to the limitation of tax deductions that would affect companies with reduced profit margins, warned the Mexican Association of Automotive Distributors (AMDA) .
Although the Congress of the Union approved a reservation to exclude automotive manufacturers from this limitation for certain expenses in tax precincts, as well as gasoline and diesel distributors, agencies dedicated to the marketing of vehicles were left out of that benefit.
The problem, according to Guillermo Rosales Zárate, executive president of AMDA, lies in the fact that the modification establishes a limit of 96.6% on expense deductions, which could cause distributors to pay taxes on profits they did not obtain.
How much does an agency actually earn from selling a vehicle?
To explain the consequences of the measure, AMDA presented a financial analysis prepared with accounting information from the 2025 fiscal year, showing how the income of automotive agencies is distributed.
For every 100 pesos that a distributor bills, only 38 cents of profit remain before the payment of ISR and the distribution of profits to the workers (PTU).
The breakdown shows that 85.05 pesos are allocated to the cost of vehicles sold, while another 9.13 pesos correspond to departmental expenses, such as workshops, sales staff, and showroom . An additional 3.48 pesos cover administrative and corporate expenses, and 1.96 pesos are for financing.
This means that, even if an agency records significant sales, most of its revenue is used to cover acquisition and operating costs, leaving a small margin on which its tax obligations are calculated.
Why might the reform increase tax payments?
Currently, companies pay a 30% income tax rate on their taxable income. However, the analysis presented by AMDA argues that the new limit on deductions would cause a considerable increase in the effective tax burden , particularly for distributors with lower profit margins.
In the average scenario presented by the association, the effective income tax rate on taxable income would increase from 30% to 225.4%. This does not mean that the statutory tax rate would increase to that percentage, but rather that the calculated tax amount would exceed the profit earned by the company .
The effect would vary depending on the profitability of each distributor. According to AMDA’s scenarios, an agency with a 1% profit margin on its sales would face an income tax burden equivalent to 100% of that profit, while with a margin of just 0.5%, the proportion would reach 200%.
This situation is compounded by the ongoing decline in the automotive distribution business. According to the organization, dealership profitability has decreased by 30% over the past five years , while the average number of vehicles sold per dealer has fallen from 701 units annually in 2016 to 566 in 2025.
Given this background, AMDA estimates that 30% of the distribution network could see its viability compromised. The organization, which represents more than 2,500 distributors of 77 light and heavy vehicle brands, indicated that the sector generates approximately 180,000 direct jobs.
Given this situation, Guillermo Rosales requested that the federal government, headed by Claudia Sheinbaum, issue a tax relief decree that would exempt automotive distributors from the deduction limits. This request comes after discussions the organization has held with the Ministry of Finance and Public Credit (SHCP) and the Tax Administration Service (SAT) .
AMDA argues that agencies are subject to billing controls and anti-money laundering provisions, and therefore believes they should receive tax treatment similar to that given to automakers and fuel distributors.
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