Mexican auto distributors warn of mass closures due to tax reform

The Mexican Association of Automobile Distributors (AMDA) has warned that recent modifications to the Income Tax Law (ISR) put approximately 1,000 agencies and 70,000 jobs at risk. The legislative change limits the deductibility of expenses to a maximum of 96.6%, a measure intended to prevent tax abuse through fraudulent invoicing.

Guillermo Rosales Zárate, executive president of AMDA, explained that the reform disproportionately affects legitimate businesses with low profit margins. In the vehicle distribution sector, pre-tax profits typically range between 1% and 3%. Because the tax formula does not account for specific business models, the effective tax rate could rise significantly; for instance, a 1% profit margin could result in a 100% ISR rate.

AMDA is calling on President Claudia Sheinbaum to issue an executive decree that recognizes the specific nature of low-margin distribution activities. The association argues that such a decree would mitigate the impact of the reform and prevent the potential closure of up to 30% of its member agencies.