Building a plant in Mexico? The VAT on your investment is recoverable — if you structure it in time

A new plant pays 16% VAT on almost everything: the land, no — but construction, machinery, equipment and installation, yes. On a US$20-million investment, we are talking tens of millions of pesos of VAT paid before the first peso is invoiced. Mexican law allows you to recover them — but the mechanism is chosen and documented before the first expense, not when the CFO asks where that money went.

Pre-operating period: two routes, one decision

Art. 5, section VI of the LIVA gives the taxpayer two options in the pre-operating stage: (a) request the VAT refund month by month during the pre-operating period, filing the project estimate (activities to be carried out, proportion of taxable acts, timeline), or (b) wait and credit all the accumulated VAT starting from the first month of activities, adjusted for inflation. Option (a) is cash flow during construction; it demands committing to an estimate and a later adjustment if the actual proportion differs from the estimated one by more than 3%. Option (b) is simplicity in exchange for financing the works yourself. For large investments, (a) almost always wins — if the file is built well.

The fast 20-day track for investment projects

The RMF (form 71/CFF) grants refunds in 20 business days — half the general term — to taxpayers with fixed-asset investment projects, subject to strict documentary requirements. New for 2026: this benefit is restricted if the taxpayer, its suppliers or related parties fall under the fake-invoice issuance scenarios (art. 49-Bis CFF) — another reason to shield the selection of the project's contractors and suppliers from day one.

What the foreign company underestimates

• The prior administrative infrastructure: without an active RFC, e.firma (the SAT's digital signature), an enabled tax mailbox (Buzón Tributario), a locatable tax domicile and a positive compliance opinion, no refund moves forward. All of it is set up in weeks — before the heavy spending starts.
• The construction contractors: the VAT on your construction is worth whatever the substance (materiality) of your contractors is worth. Builders with irregular payroll or subcontracting without REPSE contaminate your crediting — supplier due diligence is part of the investment project, not a procurement formality.
• The structure of the vehicle: who imports the machinery, who builds, who operates — assigning each flow to the correct entity defines your VAT profile (and your ISR and customs profile) for decades. Fixing the structure with the plant already running is major surgery.