Business meals and travel expenses: what's really deductible (and what you're being told wrong)

Few topics collect as much dinner-table mythology: "the meal with clients is deductible," "book it as travel expenses and it slips through," "invoice everything to the company's RFC (tax ID)." The law is more precise — and more generous than you think on some fronts, harsher on others. Here is the real map, article by article.

Restaurant spending: the 8.5% rule

Art. 28, section XX of the LISR is blunt: restaurant spending is 91.5% non-deductible. Only 8.5% of the bill is deductible, and only if payment was made with the taxpayer's credit, debit, service card or electronic voucher. Pay in cash and the deduction is zero, even with a flawless invoice.

Practical translation: the MXN 10,000 meal with your client leaves you with an $850 deduction. It isn't designed to be a deduction vehicle — it's designed to discourage abuse. Planning the expense while knowing this avoids the surprise in the annual calculation.

The exception that changes everything: travel expenses

That same section XX carves out from the limit the spending that qualifies as travel expenses (viáticos) or trip costs — and there the rule is different (art. 28, section V LISR): they are deductible when incurred beyond a 50 km radius of the taxpayer's establishment, applied to personnel with an employment or professional-services relationship, with these daily caps:

• Meals: up to $750 a day per beneficiary within the country; up to $1,500 abroad — accompanied by lodging or transportation (if only transportation accompanies them, payment must be by card).
• Car rental: up to $850 a day, domestic or abroad.
• Lodging abroad: up to $3,850 a day (domestic lodging has no specific cap in this section, but requires complete documentation).

These amounts are in the law — they aren't adjusted for inflation each year — and the cross-cutting requirement is the usual one: a CFDI (tax invoice), a connection to the business trip, and a beneficiary with an employment or professional relationship with the company. The partner's meal on a personal trip is not a travel expense no matter how many kilometers away it is.

The mistakes that turn a deduction into a contingency

Disguising local spending as travel expenses: the 50 km radius is not a suggestion; the CFDI carries the date and place, and the cross-check is automatic. Invoicing the weekend groceries and gas to the company: a non-deductible personal expense that also feeds the partner's tax discrepancy. Unsupported travel expenses to employees: if they aren't documented, they become taxable income to the worker — omitted withholding included. The "entertainment expense": it doesn't exist as a deduction — section IV of art. 28 expressly prohibits it; what exists are travel expenses, with their requirements, and restaurant spending at 8.5%.