“Overwhelming” Tax Evasion Amounting to $1.4 Trillion

ByMexico Solidarity

This article by Fernando Camacho Servín originally appeared in the September 28, 2025 edition of La Jornada, Mexico’s premier left wing daily newspaper.

The scale of tax evasion in Mexico is “overwhelming,” as it is estimated that so-called invoicing companies —those that issue receipts for works or services that were never performed, in order to avoid paying taxes—already handle around 3.1 trillion pesos, with a direct impact of 1.41 trillion pesos that never reach the public coffers.

According to a study by the Morena party in the Chamber of Deputies, the main challenge facing authorities is not so much identifying these fraudulent companies, but rather prosecuting the cases, as sanctions against them are currently very few, which fosters impunity.

The document, prepared by the deputy coordinator of the Green Party (PVEM) parliamentary group, Alfonso Ramírez Cuéllar, emphasized that between 2014 and 2019 alone, the Tax Administration Service (SAT) identified 8,204 shell companies capable of generating 8,827,000 fake invoices totaling 1.6 trillion pesos.

According to the analysis, the resulting fraud amounted to 354 billion pesos, equivalent to 1.4 percent of the national gross domestic product, making it a “multi-million-dollar theft of the Mexican state.”

In his study, Ramírez Cuéllar warned that there are still “regulatory and institutional gaps” that allow invoicing companies and their clients to operate with relative impunity. Although many of these companies have already been identified, very few have been punished for their activities.

The figures, he lamented, “are devastating,” since from 2014 to date, 13,594 taxpayers have been accused of being companies that allegedly invoice simulated operations (EFOS, invoicing companies), but 353 have managed to refute the accusation and 1,705 have obtained final judgments to annul it.

As of September 4, 2025, 12,644 taxpayers have been confirmed as having permanent EFOS status, but “there is no public information on how many of these cases have actually reached criminal proceedings.”

Despite oversight programs and legal reforms, the legislator noted, “progress in the judicial system has been limited. The SAT is able to detect cases and the Tax Attorney’s Office receives the files, but no arrest warrants have been issued in the courts. By 2025, there are 1,500 investigation files held in court.”

In practice, according to the Morena study, “efforts are focused on detection, while effective sanctions are scarce, which maintains the incentive to resort to false invoicing.”

For all these reasons, the Congressman defended the reform proposed by President Claudia Sheinbaum to combat invoicing schemes, as it “expands the concept of ‘false invoices’ and toughens the consequences” for all participants in this fraudulent scheme.