Mexico Approves IEPS Reform: New Taxes on Soda, Violent Games

The Chamber of Deputies approved amendments to the Special Tax on Production and Services Law (IEPS), introducing new levies on violent video games and a specific tax on light and zero beverages. Following a debate, lawmakers passed the reform with 337 votes in favor, 126 against, and none abstaining. The proposal will now move to the Senate for review.

More than 200 reservations were presented, with only one approved, an agreement reached between the federal government, represented by the Finance and Health Ministries, members of MORENA, and the soft drink industry. The deal reduces the tax burden on beverages with artificial sweeteners.

Initially, the government proposed raising the flavored drink tax from MX$1.64/L to MX$3.01/L and extending it to beverages with added sweeteners. However, after negotiations with beverage companies, the new rate for “light” and “zero” drinks was set at MX$1.50/L. In return, the industry committed to continue reformulating products, introducing new portion sizes, expanding low-calorie options, promoting sugar-free drinks, and strengthening self-regulation in advertising.

Other flavored beverages, including oral rehydration and electrolyte drinks with added sugars, will maintain a tax rate of MX$3.08/L. Opposition lawmakers criticized the meeting, calling the deal a betrayal to consumers. PAN Deputy José Elías Lixa accused MORENA of favoring soda companies and misleading the public by taxing non-sugary drinks.

The reform also includes an 8% tax on violent video games, which opposition legislators described as dangerous, arguing it was designed solely to boost revenue rather than improve public health or safety.

Other changes include a 100% IEPS tax on cigarettes, cigars, and other tobacco products, 32% on hand-rolled tobacco, and a gradual increase in the specific cigarette tax. The tax on games and lotteries will rise from 30% to 50%, while violent video games will now face an 8% IEPS rate.