VAT Increase to 20%: Fast Digitalization Without Protection in Mexico

The proposal to increase VAT from 16% to 20% starting in 2026 is generating nationwide debate. But beyond fiscal discussions, there is a critical point few are analyzing: this forced digitalization is coming to a country deeply vulnerable to bank fraud, identity theft, and a lack of real user protection. Before mandating electronic payments, Mexico needs digital security, education, and minimum guarantees that won’t leave citizens exposed.

Here’s why the reform, as currently proposed, could become a social and economic risk for millions.

A Country Pushing Digitalization… Without Protection Against Fraud

The Digital Transformation and Telecommunications Agency (ATDT), led by Pepe Merino, seeks to justify the VAT increase based on three arguments: raising revenue, reducing cash usage, and accelerating electronic payments.

The problem is that Mexico is not Europe or the United States. Here:

1. Banks are not required to reimburse fraud victims

2. There are no compensation funds for victims

3. No mandatory fraud insurance exists for users

4. Most financial crimes go unpunished

Every year, Mexicans lose over 80 billion pesos due to card cloning, phishing, fake apps, and digital scams. And yet, the responsibility falls entirely on the user.

If cash moves to 20% VAT and digital payments are encouraged without protection, who will absorb the losses when fraud spikes?

The current answer is brutal: you will.

A Digital Transition That Would Put Vulnerable Populations at Serious Risk

SILIKN’s investigative unit warns that no country should push a fiscal reform dependent on digital payments without first guaranteeing:

1. Mandatory banking fraud insurance

2. State compensation funds

3. Automatic reimbursements

4. Minimum security certifications for apps

5. Real digital literacy

6. Adequate connectivity infrastructure

None of this exists today.

This means the digitalization would be forced, unequal, and unsafe, placing the highest risks on those least able to bear them.

Learn more: 500,000 Passwords and Sensitive Data of Mexicans Leaked on Telegram

Reality Check: Nearly Half the Country Has No Digital Financial Services

According to the National Financial Inclusion Survey (2024):

1. 47% of adults do not have a bank account

2. Many more do not have payment apps

3. Thousands of small businesses lack terminals, signal, or infrastructure

In markets, public transport, street vendors, and rural areas, cash isn’t a preference—it is the only possible payment method.

Raising VAT without addressing inequality forces the poorest to pay proportionally more for basic needs.

The Digital Divide: Millions Lack Smartphones, Data, or Connectivity

Financial exclusion is compounded by technological exclusion. INEGI and Coneval data shows:

1. 30 million people do not have a functional smartphone

2. Millions more lack stable internet access

3. Older adults have not received digital training

What is the point of pushing electronic payments in a country where millions still lack phone signal at home?

For these populations, a VAT increase is not a fiscal adjustment—it is a direct punishment.

Immediate Inflation Impact and Increased Risk of Informality

Studies from Banco de México and CIEP estimate that the VAT increase would cause 3.2% to 3.6% additional inflation in the first year alone.

Basic expenses would increase immediately:

1. Transportation

2. Hygiene products

3. Non-exempt medications

4. Processed foods

In low-income households—where 80% of money goes to taxed goods—the impact would be devastating.

And instead of reducing informality, the reform could increase it. Why?

Because more people would attempt to avoid the tax through informal markets, cash deals, and off-the-books microeconomies.

Similar titles: Ransomware in Mexico: Cyberattacks Cause Major IT Sector Losses

Is Raising Taxes Really Necessary? There Are Billion-Peso Alternatives

The government claims the measure could raise between 320 and 380 billion pesos.

However, independent analyses show something even more revealing: the same amount could be raised simply by eliminating privileges and excessive spending among officials.

The most effective measures include:

1. Cutting vouchers, private insurance, phones, and travel for legislators: 32 billion

2. Canceling future pensions for ex-officials: up to 6 billion

3. Reducing salaries and benefits for high-ranking officials: 110 billion

4. Cutting per diem budgets and selling luxury vehicles: 80+ billion

5. Eliminating opaque trust funds: 50 billion

Total: 400–441 billion pesos, more than what the VAT increase would collect.

And all without touching citizens’ pockets.

A Country Vulnerable to Cyberfraud Cannot Be Forced Into Digitalization

The data is clear: Mexico has extremely high digital fraud exposure, uneven infrastructure, and a population that still depends on cash.

Forcing electronic payments without first securing the financial ecosystem would be irresponsible and would put millions at risk.

This is not modernization—it is shifting the fiscal burden and digital insecurity onto those least equipped to defend themselves.

At TecnetOne, we have said it repeatedly: digitalization must come with protection, education, and public policies that defend the citizen—not the other way around.