Small Studios at Risk in Mexico’s 8% Violent Game Tax Plan

Mexico’s Ministry of Finance and Public Credit has proposed an 8% Special Tax on Production and Services (IEPS) on video games with violent content as part of the 2026 Economic Package. The measure would apply to titles rated for mature audiences, aiming to discourage consumption among young people and generate funds to cover associated public health costs. The government projects the measure could raise MX$183 million (US$9.8 million) in its first year.

The government emphasizes that the initiative does not intend "to prohibit their acquisition" but rather “to obtain resources that allow for the internalization of health costs associated with their consumption,” reflecting a non-fiscal purpose to promote healthier consumer habits.

The proposal cites concerns about the impact of violent video games on minors’ mental health, suggesting “a relationship between the use of violent video games and higher levels of aggression among adolescents, as well as negative social and psychological effects such as isolation and anxiety.”

This tax would apply to games rated "C" (18+) and "D" (adults only) under the Mexican System of Equivalencies for Video Game Classification. Content considered unsuitable for minors includes “intense or prolonged violence, bloodshed, sexual or graphic sexual content, strong language, or gambling with real currency.” 

The scope covers physical and digital distribution, including international providers without a permanent establishment in Mexico. For free-to-play games, the 8% tax would apply only to in-game purchases or microtransactions. For subscription services like Xbox Game Pass or PlayStation Plus, providers must apportion the price corresponding to taxed games; otherwise, 70% of the subscription’s total value will be presumed taxable.

Digital platforms and app stores would act as withholding agents, registering with the Federal Taxpayers Registry (RFC) and reporting monthly to the Tax Administration Service (SAT). Noncompliance could result in penalties, including temporary blocking of access to the service in Mexico.

The proposal targets a market dominated by action/adventure, strategy, and shooter genres. Data from The Competitive Intelligence Unit shows that since 2021, four of the five most popular titles in Mexico feature violent content.

The measure has faced criticism from the industry, particularly independent Mexican studios. Mario Valle, Co-founder, Altered Ventures, said, “The consumer ultimately pays for this increase.” He warned that while large corporations may pass costs onto users, small studios will bear the brunt, creating a competitive disadvantage. Valle described the tax as “a direct attack on one of Mexico’s fastest-growing and most promising sectors.”

The debate over the tax's underlying premise—whether violent video games cause aggression—remains unsettled. While the government cites a 2015 American Psychological Association (APA) report, more recent studies, including research in the Royal Society Open Science, found no significant link between violent games and aggressive behavior. Analyses by psychologist Christopher Ferguson also suggest the correlation is minimal, with social factors like domestic violence or poverty being stronger predictors of youth violence.

If enacted, Mexico would become a global case study. While other countries have explored regulatory measures , a tax of this kind is unprecedented. A similar 10% tax proposal in Pennsylvania, US, did not pass, positioning Mexico on the verge of establishing a new standard for regulating the digital entertainment industry.