Federal Government Announces New Tax Incentive for the Film Industry in Mexico

On February 15, 2026, Mexico’s President, Claudia Sheinbaum, announced a comprehensive support plan for the national film industry, which includes the introduction of a new tax incentive consisting of a tax credit pursuant to the Mexican Income Tax Law (Ley del Impuesto sobre la Renta, or “LISR”). The credit is equivalent to up to 30% of eligible expenditures effectively incurred within Mexican territory and may be applied against the Income Tax (ISR) accrued in the corresponding fiscal year by the taxpayer responsible for the audiovisual project.

Based on preliminary public information, the tax credit would be calculated against the taxpayer’s investment, with the production company or platform responsible for the project executing it in Mexico. The benefit would be capped at MXN $40,000,000 (forty million pesos) per project.

At this stage, the incentive appears to be structured as a non-transferable and non-refundable tax credit. However, its specific legal nature, carry-forward rules, offset limitations, authorization requirements, and compliance obligations will need to be confirmed once the official decree and implementing regulations are published.

Local Spending Requirement

According to the available information, eligibility will require that at least 70% of total production expenses be allocated to suppliers with tax residency in Mexico.

This requirement reflects a public policy objective to strengthen the domestic value chain, generate specialized employment, and promote economic spillover within the country. From a technical standpoint, this threshold may significantly impact the contractual structuring of projects involving foreign participation, particularly in international co-production or executive production arrangements.

Scope of the Incentive

The incentive would cover the production and post-production of films, television series, digital platform content, documentaries, and visual effects (VFX) services. This measure could enhance Mexico’s competitiveness relative to jurisdictions that currently offer robust tax incentive frameworks to attract audiovisual investment.

Interaction with Other Federal Incentives

Regarding its interaction with other federal tax incentives, it has been indicated that the benefit may not be applied concurrently with incentives that provide equivalent tax relief for the same audiovisual project, which would particularly affect its coexistence with the EFICINE program.

Since both mechanisms share the nature of a federal income tax credit under the Mexican Income Tax Law (LISR), it is foreseeable that final regulations will establish non-accumulation rules to prevent a double reduction of tax liability in respect of the same eligible expenses.

State-level incentives, such as cash rebate programs, and VAT recovery through ordinary credit or refund mechanisms under Mexican VAT law operate under different legal frameworks and, in principle, may remain available under their respective rules.

Final Remarks

At Baker Tilly Mexico, we believe that the publication in the Official Gazette of the Federation (Diario Oficial de la Federación) of the new tax incentive for the audiovisual industry represents a strategic opportunity for domestic and international production companies, streaming platforms, investors, and entertainment-focused funds evaluating the structuring of projects in Mexico.