In virtual return operations (V5) conducted under IMMEX programs, there has been a contradiction in judicial criteria regarding whether the domestic purchaser is required to withhold VAT when the seller is a foreign entity with no permanent establishment in Mexico:

• If the merchandise is considered to be located in Mexican territory, the transaction constitutes a taxable event, and VAT withholding applies.
• If the merchandise is considered "exported" under the legal fiction created by the V5 customs declaration, the condition for VAT withholding is not met.

On October 2, 2025, the Mexican Supreme Court of Justice (SCJN) had scheduled for discussion the contradiction of rulings on this issue; however, the matter was withdrawn from the agenda and is currently not scheduled for discussion.

It is important for companies to closely monitor the development of this matter before the Court, even though there is currently no binding precedent from the SCJN. Nonetheless, the Tax Administration Service (SAT) may continue to apply its interpretation that VAT withholding is applicable, which means that risks of audits and tax contingencies remain in force.

At JA Del Río, we will remain attentive to any rescheduling or final resolution by the Court. We are pleased to support you in identifying tax risks, reviewing and strengthening compliance processes, and managing VAT refund applications.

We offers a wide array of specialized consulting services to assist you with these and other matters, in order to ensure that your project complies with the applicable characteristics  contained in this agreement.

If you have any questions, J.A. DEL RÍO can provide you with our experts to advise in matters concerning compliance with your legal and tax obligations. Once again, please let us know if we may be of any further assistance to you at: contacto@jadelrio.com.