We just wrapped the 10th edition of the Summit in Vilnius (wipes a tear). If you missed the live reporting – here’s Day One and Day Two. And here’s the Red Carpet gallery. The full report from the event is still in the works, and is expected to land in a week or two.
Meanwhile, something else is on the menu today – the experimental issue of RADAR, a mash-up of short updates relevant to the games industry, provided by this community’s regional experts, to keep you in the loop about what’s happening in their backyards.
The screenshot from the OS remake of XCOM is on the cover for a reason: like in that game, we aim to transmit a brief impulse, which you may investigate further (or not), by following the link and/or contacting the investigator on the ground. If you have similar developments in our own country, please email me and we’ll include it in the next transmission.
We may have a tax issue in Mexico
From Mexico City/CDMX, reports Efraín Olmedo at ALBOR Abogados:
WHAT HAPPENED?
The executive branch proposed the expenditure law for 2026, which on the issues relevant to the games industry seeks to impose an 8% tax on “violent video games” (which are played by 25% of the Mexican players), by January 2026.
The legal structure of this tax is supported on a specialized form of tax in Mexico (Special Tax on Production and Services [IEPS]) which deals with non-traditional taxation purposes, such as the avoidance of health damaging products.
This tax is traditionally applied to tobacco, alcohol and sodas, as it works as a discourager for consumption.
Very important note for the reader: this happened just after the Summit, it is not that Efraín was not updating his legislative newsletter.
RELEVANCE TO THE GAMES INDUSTRY?
The proposed law addresses the different forms of distribution, and seeks for the tax to be applied to:
- the sale of physical copies
- the sale of digital copies
- microtransactions
- subscription models; and
- digital intermediaries
The games that fall under this proposal are the games that contain:
- intense violence, or prolonged scenes of intense violence
- bloodshed
- sexual content
- strong language; or
- bets with real money.
This is of course very subjective and at this point does not seem to be directly related to the game classification system, therefore it does not affect just a specific theme or gameplay, but instead it affects the content of the game without providing any proportionality of this content in the overall game.
This proposal also affects any company that does not have a legal entity in Mexico, as it now mandates foreign companies to be registered before the Tax Authority, designate a legal representative in Mexico for tax purposes, offer their prices including this tax, and have a register of people that receives their services.
WHAT’S NEXT?
After this proposal, the next step is for the Chamber of Representatives to approve this, which later will be approved by the Senate, most likely by the end of October.
At this point, what is possible is to lobby – as an industry – and explain to the main representatives why this is not the way to solve any of the proposed problems, and instead this will damage the industry in Mexico.
Considering how political this issue just became and the control held by the executive in both chambers, it seems unlikely that lobbying will solve this, but it is still worth trying.
The litigation solution: Once the law enters into effect, which will be January 2026, each company that has standing will be entitled to try a constitutional appeal before a District Judge and request a precautionary measure against this law and eventually obtain protection against the law.
Two very important things to know:
- An appeal in Mexico will only protect the plaintiff, and while other companies may be in the exact same situation, a decision will not protect everyone against the law. Only the company filing the appeal will be protected by that favorable decision.
- After the law enters into effect, any interested party will have 30 business days to file the appeal; if not filed during that time, then the opportunity to obtain protection is lost.
But considering this, there is time to plan and prepare a good case against this law. Here you will find the proposal (what is relevant to us you will find between pages 26 to 46; the document is in Spanish).
EDITOR’S NOTE:
If your company may be taking action, and would like to coordinate with others, you can reach Efraín at this email address. Or use one of the existing group threads for studio counsels that discuss the Relay Race, and the Berlin Zoo.
This post was created by: the Games Industry Law Summit. You can subscribe to its newsletter here:
https://games-industry-law-summit.ghost.io/radar-tax-on-violent-games-decisions-on-epic-studio-jobs/