Name of Instrument
Mexico carbon tax
National Carbon tax
Implemented in 2014
Mexico
Set price
CO2
Upstream
Yes, unlimited
Covered Sectors
- Covered
- In principle
Description
The Mexican carbon tax is an excise tax under the special tax on production and services (Ley del Impuesto Especial sobre Producción y Servicios). The tax applies to the sale throughout the national territory or the import of fossil fuels, with the exemption of natural gas. It is not a tax on the full carbon content of fuels, but on the additional CO2 emission content compared to natural gas.
Taxpayers can choose to pay this tax through the delivery of carbon credits, when they originate from projects developed in Mexico and endorsed by UNFCCC.
Revenues are allocated to the country’s general budget and no specific uses are defined.
Recent Developments
Coverage
The Mexican carbon tax applies to CO2 emissions from all sectors. The tax covers all fossil fuels except natural gas. Use of natural gas is exempted, as well as other fossil fuels not intended for combustion processes such as paraffin. The tax is capped at 3% of the fuel sales price.
Pricing and allocation approaches
The price is set by the Government
Compliance Approaches
Upstream. Producers and importers of the fossil fuels covered are liable for payment of the tax. The carbon tax is paid on a monthly basis. Companies liable to pay the carbon tax may choose to pay with credits from CDM projects developed in Mexico or CERs that are also eligible for compliance in the EU ETS, equivalent to the market value of the credits at the time of paying the tax.
Offsets must be issued through projects developed in Mexico, have been issued after 1 January 2014, and correspond to the second commitment period of the Kyoto Protocol.
Relation to other compliance CPIs
Not applicable
Covered Emissions
Price range:
in 2023
Indicates instruments with multiple price levels. Only the main rate is shown for these instruments. Data last updated on 1 April 2023
