Doing Business in Mexico: Detailed Contracts Are Key to Defending the Tax Treatment of Your Transactions Before the SAT
November 2, 2026
| Doing Business in Mexico: Detailed Contracts Are Key to Defending the Tax Treatment of Your Transactions Before the SAT | Operaciones en México: contratos detallados, clave para defender ante el SAT los efectos fiscales de sus operaciones |
|---|---|
| Several recent Mexican court precedents (criterios judiciales) establish that generic contracts are not, on their own, sufficient to give tax effect to transactions invoiced between the companies that enter into them. Under these precedents, generically drafted contracts lack evidentiary value. The courts noted that the formal existence of a contract does not, by itself, prove that the contract was actually executed. In high-value transactions, genuine contracts typically specify the goods, quantities, and terms, as well as the assets, or resources involved, consistent with what was invoiced. Absent these elements, the contract is a mere documentary formality and cannot produce tax effects. This reflects the Mexican tax authority’s focus on the “materiality” (materialidad) of transactions — that is, evidence that the transactions actually took place, similar in concept to the economic substance analysis familiar to U.S. taxpayers. In practice, contracts prepared from standard templates — with vague descriptions, no deliverables, no prices or quantities tied to the actual transaction, and no mechanisms evidencing performance — are of no use in defending transactions before Mexico’s Tax Administration Service (Servicio de Administración Tributaria, or SAT), the Mexican equivalent of the IRS. This may result in the disallowance of deductions for income tax (Impuesto sobre la Renta, or ISR) purposes and, consequently, of the related value-added tax (Impuesto al Valor Agregado, or IVA) credits, leading to the assessment of tax liability. A standard form contract is no substitute for specialized legal advice. Each contract should be reviewed and tailored by counsel to the specific features of the transaction, so that it accurately describes the goods, services, human and material resources, deliverables, and terms, and is linked to the supporting documentation needed to sustain a potential defense before the SAT. Foley & Lardner’s Tax, Tax Litigation, and Corporate team in Mexico City has extensive experience defending the materiality of transactions. Contact us to review your contracts and supporting files in light of these new court precedents — before the SAT challenges them. | Diversos criterios judiciales emitidos recientemente establecen que los contratos genéricos no bastan, por sí solos, para otorgar efectos fiscales a las operaciones facturadas entre las compañías que los celebran. Conforme a estos criterios, los contratos redactados de forma genérica carecen de valor probatorio. Los tribunales señalaron que la existencia formal de un contrato no demuestra, por sí misma, que este se haya ejecutado. En operaciones cuantiosas, los contratos reales suelen detallar los bienes, las cantidades y las condiciones, así como la maquinaria, las herramientas o los recursos involucrados, en correlación con lo facturado. Sin esos elementos, el contrato constituye una mera formalidad documental y no puede generar efectos fiscales. En la práctica, los contratos elaborados a partir de formatos estándar — con descripciones vagas, sin entregables, sin precios o cantidades vinculados a la operación real y sin mecanismos que evidencien su cumplimiento — no sirven para defender las transacciones ante el SAT. Ello puede traducirse en el rechazo de deducciones para ISR y, por ende, del IVA acreditado, con la consecuente determinación de créditos fiscales. Un contrato estándar no sustituye la asesoría especializada. Cada contrato debe ser revisado y adaptado por abogados conforme a las particularidades de la operación, de modo que describa con precisión los bienes, servicios, recursos humanos y materiales, entregables y condiciones, y que se vincule con la documentación soporte necesaria para sustentar una eventual defensa ante el SAT. El equipo fiscal, de litigio fiscal y corporativo de Foley & Lardner en la Ciudad de México cuenta con amplia experiencia en la defensa de la materialidad de las operaciones. Contáctenos para revisar sus contratos y expedientes a la luz de estos nuevos criterios judiciales, antes de que el SAT los cuestione. |
Author(s)
Related Insights
November 2, 2026
Foley Viewpoints
Recent Circuit Court Cases Examine the Limited Partner Self-Employment Tax Exception
Two recent Circuit Court of Appeals cases have provided additional guidance on the scope of the self-employment tax exception for limited partners’ distributive share of partnership income under Section 1402(a)(13).
November 2, 2026
Foley Viewpoints
In re Cloudflare: The Section 144 Safe Harbor Remains Strong, but Plaintiffs Pry Open the “Good Faith and Without Gross Negligence” Door a Little Further
The defendants won on every statutory argument, but the plaintiffs still prevailed on one point: They showed a reasonable probability that the special committee did not act “in good faith.”
October 30, 2026
Health Care Law Today
Peptides: HHS Announces Limited Enforcement Discretion for Compounding of Six Peptides
At issue is the applicable regulatory status of compounding by 503A pharmacies using six peptide bulk drug substances: BPC-157, Epitalon, KPV, MOTS-c, Semax, and TB-500. Written comments can be submitted until two weeks after the date of publication in the Federal Register (i.e., Nov. 13, 2026).