What is the “Special Tax on Production and Services” (Impuesto Especial sobre Producción y Servicios or IEPS for its acronym in Spanish)?
The Special Tax on Production and Services (IEPS) is applicable to the disposition of gasoline and diesel and is regulated by the Law of Special Tax on Production and Services and the Federal Income Law. If public gasoline and diesel prices are higher than its production costs, the IEPS is paid by final gasoline and diesel consumers. If public prices are lower than production costs, the IEPS rate is negative and absorbed by the Secretary of Finance and Public Credit (SHCP), such amounts are credited to PEMEX, who is an intermediary between the SHCP and the final consumers. The difference between gasoline and diesel public prices and production costs is primarily the IEPS. Gasoline and diesel public prices are determined by the SHCP. PEMEX’s gasoline and diesel production costs are referenced to an efficient refinery costs in the Gulf of Mexico (as an international market price reference). When international market prices decrease and public prices remain constant, the IEPS increases an
