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medical manufacturer vat recovery in mexico

VAT Refund Recovery in Mexico

Recovering historic VAT balances and restoring cash flow through a high-volume, coordinated refund strategy.
INDUSTRY
Medical sterilization equipment manufacturing
COUNTRY OF ORIGIN
Ireland
WORKFORCE
Approx 550 employees in Mexico
TIMELINE
Start January 2026, expected completion in 2027
$162M Cash flow (MXN) recovered in 5 months
100% Approval rate for refund requests
$482M Historic VAT balances (MXN) reviewed and elibigle
5 yrs Of accumulated VAT refunds addressed

Business Challenge

Our client had accumulated approximately five years of VAT refund balances exceeding MXN $500 million, plus inflation adjustments. The company did not have sufficient internal capacity to complete the volume of work required to manage the refund filings and respond to tax authority requests, causing the balances to continue accumulating. 

Prodensa's Approach

Prodensa implemented a high-volume reconciliation and filing model. Historic credit balances were reconciled in bulk so that three to four refund periods could be submitted each month. At the same time, the team continued reconciling additional periods and responding to VAT information requests without reducing the pace of new refund submissions.

Business Impact

The project restored access to significant working capital and reduced a major financial bottleneck. In five months, the company received MXN $162 million in cash flow that it had been unable to recover during the prior five years.

QUANTITATIVE RESULTS

  • MXN $162 million in cash flow recovered in five months.

  • MXN $136 million in historic VAT refunds recovered - nearly one-third of the balance accumulated when the service began.

  • 100% approval rate for the VAT refund requests submitted to date.

 

  • MXN $26 million in additional financial gains generated through inflation adjustments.

  • MXN $482 million in historic VAT credit balances reviewed and determined eligible for refund - equivalent to 96% of the approximately MXN 500 million in accumulated historic balances.

Additional Opportunities Identified

During the review, the team identified that one supplier was not issuing properly stamped CFDI invoices. By requesting compliant issuance, the client could potentially:

  • Increase VAT credit balances by approximately MXN 3 million per year, plus inflation adjustments.

  • Increase corporate income tax deductions by more than MXN 20 million per fiscal year.

Qualitative Impact

The solution enabled our client to operate with stronger liquidity, reduced the backlog of historic VAT balances, and established a structured cadence for preparing, filing, and supporting refund requests. The work also improved coordination across shipping, import/export, treasury, accounts payable, and tax teams.

Key takeaway: A coordinated, high-volume refund strategy can convert long-standing VAT balances into working capital while strengthening the documentation and response process required by Mexico's tax authority.

PRODENSA

Prodensa's Leadership

Arturo, along with his team of tax experts work with foreign companies of all sizes to ensure fiscal compliance and VAT health.
BROWSE OUR ADVISORS
Arturo-Quintero-Finance-Director-Prodensa-2
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"I would like to take the opportunity to recognize each and every one of you [Prodensa] for the outstanding results we have built together... Every one of you has consistently acted with professionalism, looking for ways to make things happen, supporting every transaction, and working alongside departments such as shipping, import/export, treasury and accounts payable... Thank you very much to everyone for your commitment and dedication..."
ClientApril 21, 2026
“...After nearly five years, we completed 100% of the February 2021 period, which was close to expiring, and responded on time and in full to every point requested in the authority's two information requests.... I especially want to emphasize the detailed and broad, thorough explanations included in each response, as well as the workpapers prepared to address the authority's requests... I am convinced that this way of working will help us achieve our goal of recovering all older periods in the near term, reaching full recovery of balances... These amounts are necessary and vital to support our economic activities. Thank you to the entire team for your support.”
ClientDecember 2, 2025

Looking to recover VAT in Mexico?

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