railroad-train.jpg
  1. Home
  2. Ship With Us
  3. Service Status Updates
KCS-shortlines.jpg
« Back

Mexico VAT changes in 2022 update #2 - What it means to you

November 29, 2021

Attention Cross-border southbound shippers:  

As we previously communicated on November 1, 2021, Mexico will be implementing Tax Reforms in 2022 which include a prospective change to the Value Added Tax (VAT) Law. These changes will be effective on January 1, 2022. You can read more these changes here on pdf pages 118-120 and again on pages 258-259 (in Spanish).     

In summary, the 2022 Tax reform modifies Article 5 of the VAT Law which eliminates the recoverability of VAT paid by KCSM (and other transportation companies) on its expenses that support southbound cross-border transportation services that are not subject to VAT. 

Prior to this change, KCSM was able to provide southbound moves in a manner that were not subject to VAT. Due to the impact of this law, KCSM will generally no longer offer southbound moves that are not subject to VAT.

As a result of this regulatory change, we will be implementing the following actions to our southbound cross-border shipments: 

  • Shipments billed by KCSM under Rule-11 mechanism will be subject to VAT effective January 1, 2022. You will be receiving further information from your commercial representative and may discuss any questions or other options with the representative.
  • Customers that currently utilize through-rate (non Rule-11) billing structure, will be contacted by their commercial representative to discuss options to incorporate VAT tax into their billing structure 

We recognize there are many large-scale changes occurring in Mexico directly impacting transportation.  KCS is committed to staying tightly aligned on the changes that President Lopez Obrador and his administration are making and to communicating them to you as we are made aware.  

Should you have any questions on this regulation change, please don’t hesitate to contact our KCSM Customers Solutions Center or your sales and marketing representative who will be happy to answer your questions.  

Thank you for being a loyal Kansas City Southern customer.