Input VAT Paid through Compensation Not Deductible in Mexico

Journal
Author
Ramírez Morales, P.
Country
Mexico
Published Date
Issue
International VAT Monitor 2025 (Volume 36), No. 3
FormatPDF
EUR
45
| USD
50 (VAT excl.)

The Mexican Federal Civil Code provides that the compensation is a valid mean to terminate civil obligations. Accordingly, output VAT is chargeable if the price of a given good or service is paid through compensation; it was a commonly accepted standard that input VAT was deductible as well, if the corresponding price was offset. Nevertheless, the Mexican Supreme Court of Justice ruled that the input VAT, in order to be deducted, has to be paid in cash.