A Strategic Pivot for Tequila

Mexico’s National Chamber of the Tequila Industry(CNIT) has introduced a forward-thinking proposal for the sector’s economic future: transitioning the IEPS (The Mexican excise tax on production and services.) from an ad valorem scheme—which taxes based on the bottle’s price—to an ad quantum model, taxing based on the actual alcohol content of the product. Currently, the tax is calculated on the sales value, creating disparities and facilitating tax evasion.

The trade body argues that migrating to a model strictly based on alcohol by volume (ABV) would allow for more efficient oversight by the SAT (Mexico’s federal tax authority.). It is estimated that in 2023 alone, tax evasion in the alcoholic beverage sector reached 19.5 billion pesos. This reform seeks not only to close legality gaps but also to level the playing field for formal producers.

Furthermore, the initiative includes a tax incentive for small producers of Tequila and Mezcal, protecting the heritage of traditional communities. From a public health perspective, this ad quantum framework would increase the price of low-cost, high-proof beverages, disincentivizing the consumption of products of questionable quality. This modernization is seen as a vital step in strengthening the global competitiveness of Mexico’s national spirit.