UPDATED December 17, 2021: Mexico Value Added Tax (VAT) Change Effective January 1, 2022

Announcement Number: CN2021-70
Categories: General Announcements
Posted Date: December 10, 2021

*Updated December 17, 2021, to include additional information about through-rates.*

To Our Customers,

The Mexican government recently approved a change to its Value-Added Tax (VAT) law that may affect customers with southbound shipments from the United States to Mexico.

Beginning January 1, 2022, Mexican railroads have informed Union Pacific that they will charge a 16% VAT on the Mexican portion of all shipments originating outside of Mexico.

This change will be effective January 1, 2022, per the Mexican government’s latest communication.

What the VAT Change Means for Union Pacific Customers
The revised VAT law only affects customers with southbound shipments from the United States to Mexico. Those who are impacted may see an additional VAT charge added for the Mexico portion of their shipment. Union Pacific is providing this notice to our customers as a courtesy because, while this will not affect Union Pacific rates, it could have cost implications for the Mexican portion of southbound shipments.

  • Shipments billed by Union Pacific under Rule-11: Billing for the U.S. portion of the shipment will remain unchanged. However, all shipments from the U.S. to Mexico will be subject to the VAT for the Mexican portion of the shipment effective January 1, 2022. For further information, please consult with your Mexican rail carrier.
  • Shipments billed by Union Pacific under a through-rate: Union Pacific’s portion of the rate will remain unchanged. However, the Mexican carrier may either increase its rate on the Mexico portion to cover the VAT charges or add a VAT charge to all movements. Such changes may be reflected on the Union Pacific invoice. Please contact your sales representative for more information.

If you have any questions, please contact your sales representative.