Mexico

August 1, 2025 – DLA Piper advised Grupo Cox (Cox), a leading Spanish multinational water and energy company, in its acquisition of Iberdrola’s assets in Mexico for US$4.2 billion – one of the largest cross-border energy deals of the year. “We appreciated the opportunity to work with the Cox team on this landmark acquisition and look forward to advising the company on its future cross-border initiatives,” said Francisco J. Cerezo, Chair of the US-Latin America and Ibero-Américan practices, who co-led the deal team. “I want to express my deep appreciation for the service provided in this transaction by the DLA Piper team, led by Francisco Cerezo and Mauricio Valdespino,” said Antonio Medina Cuadros, Chief Legal Officer and Secretary General of Grupo Cox. “Their professionalism and tireless work ethic went far beyond what one could expect from legal counsel. Without a doubt, their outstanding effort and dedication were among the key factors in the success of this complex transaction.” In addition to Cerezo (Miami), the cross-border DLA Piper team was co-led by Partner Mauricio Valdespino (Mexico City) and included Partners Edgar Romo, Guillermo Aguayo, Roberto Ríos (all Mexico City), Robert da Silva Ashley (Miami), Michael McGuiness, Amadeu Ribeiro, Frank Mugabi (all New York), Yoko Takagi (Madrid), and Senior Associate Joseline Rodriguez (Miami), and Associates Eduardo Gallástegui, Regina Esparza, and Manuel Domínguez (all Mexico City), among a team of more than 40 DLA Piper attorneys. With more than 1,000 corporate lawyers globally, DLA Piper helps clients execute complex transactions seamlessly while supporting clients across all stages of development. The firm has been rated number one in global M&A volume for 15 consecutive years, according to Mergermarket, and ranked as number one in VC, PE, and M&A in combined global deal volume, according to PitchBook. DLA Piper in Latin America’s team offers full-service business legal counsel to domestic and multinational companies with interests in and operations throughout the region. Our integrated approach to serving clients combines local knowledge with the resources of the DLA Piper global platform. With more than 400 lawyers practicing throughout Argentina, Brazil, Chile, Mexico, Peru, and Puerto Rico, in addition to our US-based cross-border attorneys, our teams frequently work with our professionals throughout the LatAm region, Iberian Peninsula, and around the globe. DLA Piper’s global platform of 90+ offices in more than 40 countries enables us to serve all our clients’ legal and business needs, whether they are based in Latin America or wish to do business there.  For more information, visit Latin America | DLA Piper The firm recently received the highest ranking for law firm client service in the BTI Client Service A-Team 2025 report, which identifies law firms providing exceptional service based on client feedback. About DLA Piper DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa, and Asia Pacific, positioning us to help clients with their legal needs around the world. In certain jurisdictions, this information may be considered attorney advertising. dlapiper.com Contact Geneva Youel, Media Relations, DLA Piper, +1 213 330 7779

Environmental taxes are a key fiscal tool in Mexico to reduce ecological damage and promote sustainable practices. Their implementation helps to discourage polluting activities, generate revenue for environmental protection, and foster an economic development aligned with the conservation of natural resources. In recent years, their regulation at the state level has evolved to strengthen environmental responsibility. However, their implementation currently faces legal challenges, in which the Supreme Court of Justice of the Nation has played a fundamental role in ensuring that their design complies with the principles of proportionality and tax equity. INTRODUCTION Among public policy tools aimed at fostering environmental protection, environmental taxes stand out as a mechanism designed to discourage the use of unsustainable technology and penalize polluting activities, while generating income that can be allocated to ecological conservation and restoration initiatives. In Mexico, at both federal and state levels, there are various tax regulations addressing activities with a high environmental impact. This article explores the role of environmental taxes in the various federal entities in relation to the Supreme Court rulings on the constitutionality of such taxes, with the aim of understanding their legitimacy framework. CONSTITUTIONAL BASIS FOR ENVIRONMENTAL TAXES Article 31, section IV of the Political Constitution of the United Mexican States establishes the obligation of Mexicans to contribute to public expenses—at the federal, state, and municipal levels—proportionally and equitably, according to their economic capabilities. This contribution is primarily carried out through the payment of taxes established in laws, which are used to finance public services, infrastructure, healthcare, education, and other government functions. Thus, the principles of proportionality and tax equity seek to ensure that each person contributes according to their income and capabilities, promoting a fair system. Following this rationale, environmental taxes are levies imposed on activities that generate a negative impact on the environment, functioning as fiscal instruments that allow the correction of adverse environmental impacts, discourage harmful behavior, and encourage the adoption of more sustainable technologies and products. Their purpose is to shift the cost of environmental externalities (such as air, water, or soil pollution) to those who cause them, so that the responsible parties pay for the damage they inflict on the natural environment and are incentivized to change their technology or activities that harm it. AUTHORITY OF FEDERAL ENTITIES TO LEGISLATE ON THE MATTER To regulate tax matters, Article 73, section XXIX of the Mexican Constitution grants the exclusive authority to the Congress of the Union to determine various taxes. Article 115 establishes that municipalities will freely manage their finances, which are composed of revenues from assets they own, as well as taxes and income determined in their favor by state legislatures. Meanwhile, Articles 117 and 118 set forth the prohibitions for federal entities. From these provisions, it follows that each level of government, within its respective jurisdiction, is authorized to define the necessary taxes to cover the expenditures established in its budget, provided these are not expressly exclusive to the federation, prohibited to federal entities, or reserved for them. In this regard, state-level regulation of environmental taxes in Mexico has undergone significant evolution in recent decades, reflecting growing concern for environmental protection and the need to fund ecological initiatives at the local level. Environmental taxes have progressively evolved across different states. Currently, 18 states have active environmental taxes, while others have proposed new tax initiatives in this area. For example, on October 29, 2024, Coahuila proposed a bill to tax direct emissions from fixed sources of CO₂, CH₄, N₂O, HFCs, PFCs, and SF₆, with a rate of 4.5 UMA per ton of CO₂ equivalent (CO₂e). On December 5, 2024, Tabasco introduced a bill to tax the following: natural resource extraction; waste disposal, confinement, and storage; water pollution emissions; soil/subsoil pollution emissions; and gas emissions to the atmosphere. SUPREME COURT CRITERIA ON ENVIRONMENTAL TAXES Although the Mexican Constitution grants states a degree of authority to legislate on tax matters, the division of powers between the federation and states remains a point of contention. The Supreme Court has ruled on several environmental taxes, sometimes upholding their constitutionality when they regulate local matters, and other times declaring them unconstitutional when they infringe upon the exclusive powers of the Congress of the Union. The Supreme Court has maintained that the taxable event must be linked to the polluting conduct or the environmental issue being addressed. The tax base must relate to any act capable of causing ecological harm, aiming at remediation and promoting cleaner production processes.[1] It also established that contributory capacity is evidenced not only by the mere possession or exchange of wealth but also by the economic benefit derived from environmental goods. Therefore, a causal relationship must exist between the taxable event and the physical units determining environmental damage, with a reasonable correlation reflected in the tax base.[2] The Court has also noted the lack of a clear boundary between federal and local jurisdictions in many cases[3], due to a failure to systematically interpret Articles 73 (sections VII and XXIX), 117, 118, and 124 of the Mexican Constitution, which delineate tax jurisdiction. Amparo en revisión 1071/2018 In this case, the Supreme Court analyzed environmental taxes in Zacatecas’ State Revenue Law. It ruled that Articles 8 to 13 were unconstitutional as they violated the exclusive federal power under Article 73, section XXIX(2), since environmental remediation taxes on material extraction fall solely under congressional authority. However, regarding Articles 28 to 34 (taxes on waste storage), the Supreme Court found them to violate the principle of proportionality, as the tax was calculated solely on the volume of waste stored, without considering the actual environmental impact. It failed to distinguish between reusable and non-reusable materials or take into account co-processing in other industrial applications. Also, Article 24, paragraphs 2 and 3, taxed additional pollution units at the same rate as complete units, disregarding pollution concentration levels and thus violating proportionality. Nevertheless, the Court upheld Articles 14 to 34 in terms of jurisdiction, stating: The tax on atmospheric emissions does not involve national airspace exploitation (Articles 27, 42, 48 Mexican Constitution do not apply). Taxes on discharges into soil, subsoil, and water involve state-jurisdiction waters and do not constitute resource exploitation, so regulation is shared. Waste storage taxes apply to landfills within the state and do not interfere with federal powers. Thus, the Supreme Court recognized these taxes as proportionate, as they acknowledge the environmental harm caused by such activities. Constitutional controversy 119/2020 In this case, the Supreme Court declared the invalidity of Articles 133–137 of the Baja California State Revenue Law, which created a tax on gas emissions. It found the local legislator had overstepped into the federation’s exclusive power to tax hydrocarbons (Article 73, section XXIX(5)(c) Mexican Constitution). Though Baja California claimed the tax was ecological, it was applied to the volume of gasoline, diesel, natural gas, and LP gas sold to consumers, not to actual emissions. The Supreme Court therefore invalidated the tax for encroaching on federal jurisdiction. CONCLUSION State regulation of environmental taxes in Mexico has evolved to foster environmental protection and sustainable development. These fiscal tools serve to mitigate negative environmental impacts, discourage harmful behaviors, and promote cleaner technologies, while also funding environmental remediation. Nonetheless, implementation has sparked constitutional challenges, particularly regarding states’ taxing authority and the principles of proportionality and equity. The Supreme Court has played a key role in defining the validity of such taxes, establishing that their application must: Fall within state jurisdiction, without infringing federal powers;[4] Be directly linked to polluting activities, with a tax base tied to emissions or contamination rather than indirect factors;[5] Fulfill the principle of proportionality, reflecting the extent of environmental damage and taxpayer capacity.[6] Despite these challenges, environmental taxes remain relevant for Mexico’s environmental policy. For them to be effective tools, they must be designed with sound technical criteria, comply with constitutional principles, and ensure that collected revenues are genuinely used for environmental protection. In a context where federal entities seek to strengthen their tax collection, local governments have turned to environmental taxes as a fiscal tool that also aims to protect the environment. At Lammoglia Abogados, we offer specialized advisory services to evaluate the applicability of these taxes under current legal frameworks, identify whether companies engage in taxed activities or are located in obligated jurisdictions, detect opportunities, and define specific obligations. We also design tailored compliance plans and, if necessary, provide legal defense and litigation support to avoid undue sanctions or recover improperly paid amounts. In case of any questions or comments regarding the above, please do not hesitate to contact us. Fernanda Garibay Carrillo [email protected] Rocío Toriz Colín [email protected] [1] From that amparo en revisión arose jurisprudence 2a./J. 54/2020 (10a.), registration number 2022288, under the title: "ECOLOGICAL OR COST-EFFICIENT TAXES. THEIR CALCULATION DESIGN INCLUDES A PUBLIC DUTY OF ENVIRONMENTAL PROTECTION, WHICH DISTINGUISHES THEM FROM OTHER NON-FISCAL ENVIRONMENTAL CONTRIBUTIONS." [2] From that amparo en revisión arose jurisprudence 2a./J. 55/2020 (10a.), registration number 2022285, under the title: "ECOLOGICAL OR COST-EFFICIENT TAXES. PARAMETERS FOR ANALYZING THEIR COMPLIANCE WITH THE PRINCIPLE OF TAX PROPORTIONALITY." [3] This has been upheld in jurisprudence from the 7th Era; Plenary; S.J.F.; Volume 151–156, Part One; page 149, registration number 232505, under the title: "TAXES. CONSTITUTIONAL SYSTEM REGARDING TAX MATTERS. JURISDICTION OF THE FEDERATION AND THE FEDERAL ENTITIES TO ENACT THEM." [4] This issue was resolved in the judgment of constitutional controversy 119/2020, decided by the Plenary of the Supreme Court of Justice of the Nation. [5] This issue was resolved in the judgment of constitutional controversy 119/2020, decided by the Plenary of the Supreme Court of Justice of the Nation. [6] This issue was resolved in the judgment of amparo en revisión 1071/2018, decided by the Second Chamber of the Supreme Court of Justice of the Nation.

Mexico City – Lammoglia Abogados is pleased to announce the addition of Rodrigo Juárez Castañeda as Of Counsel. Rodrigo will lead the newly created Antitrust and Technology, Media and Telecommunications (TMT) practice areas. His arrival marks a significant milestone in our commitment to offering innovative legal solutions in these dynamic fields. Rodrigo Juárez boasts a remarkable track record in both public and private sectors, particularly in telecommunications and economic competition, including having served as head of Monopolistic Practices and Unlawful Concentrations investigations in the Investigative Authority of the Federal Telecommunications Institute (IFT). His strategic vision and leadership have been instrumental in shaping regulatory practices, so we are excited to bring this expertise to our clients. Rodrigo holds an LLB from Centro de Investigación y Docencia Económicas (CIDE, 2008) and an LLM from London School of Economics (LSE, 2012). His academic credentials include prestigious institutions such as Barcelona School of Economics and the Universidad Nacional Autónoma de México. This solid educational foundation, combined with his extensive experience, supports the launch of the Antitrust and TMT practice under his guidance, allowing us to offer bespoke legal strategies that address the unique challenges faced by our clients. In this way, the firm expands its service portfolio to encompass strategic advice and legal representation in economic competition, technology, media, telecommunications, as well as related fields such as intellectual property, privacy, consumer protection and e-commerce. At Lammoglia Abogados, we are dedicated to advancing our clients' interests with cutting-edge legal solutions. Rodrigo's expertise will be invaluable as we expand our service offerings and reinforce our position in antitrust and telecommunications law.