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An Incoterm is not a shipping detail. It is the first instruction your customs value follows.
Most importers treat the Incoterm on a commercial invoice as a logistics line: who pays the freight, where the risk passes, which party books the insurance. That reading is operationally correct and commercially incomplete. In Mexican customs, the Incoterm is the rule that decides which costs are already inside the price you paid and which ones must be added to reach the customs value, the base on which every one of your import taxes is calculated.
For years that distinction lived quietly inside the broker's worksheet. It does not live there anymore. With the Manifestación de Valor Electrónica (MVE, Mexico's electronic value declaration) now mandatory, the customs value stopped being a number your broker calculates and became a figure you, the importer, sign and have to prove, expense by expense. The three-letter term on your invoice is where that proof starts.
What your customs value actually is
Article 64 of the Ley Aduanera sets the base for the Impuesto General de Importación (IGI, the general import duty) as the customs value of the goods, and defines that value as the transaction value: the price actually paid or payable for the merchandise. Mexico applies the same valuation system the rest of the world uses, the one built on Article VII of the GATT.
The trap is assuming the invoice total is the customs value. It rarely is. The price on the invoice is the starting point. The law then requires you to adjust it, up or down, to arrive at the figure your duties are actually calculated on. What determines the size of that adjustment is the commercial term you agreed with your supplier. That is the Incoterm.
The Incoterm decides what gets added, and what gets removed
Article 65 of the Ley Aduanera lists the charges that must be added to the price paid when they fall on the importer and are not already included. These are the incrementables: commissions and brokerage, the cost of containers and packing, and the freight, insurance, handling, loading and unloading incurred to bring the goods up to the point of entry into national territory. It also captures buyer-supplied materials and certain royalties.
Article 66 does the opposite. It lists what does not form part of the transaction value, provided those amounts are broken out separately from the price: charges for construction, assembly or technical assistance performed after importation, transport and insurance incurred after the goods reach national territory, and Mexican domestic taxes. These are the decrementables.
The Incoterm is what tells you which of these apply, because the Incoterm defines who bears each cost and up to what point. A term that leaves freight and insurance to the buyer means those costs sit outside the price and have to be added. A term where the seller delivers fully to the buyer's door inside Mexico means the price already contains costs that the law says do not belong in the customs value and have to be stripped out.
IncotermWhat the price typically excludesValuation consequenceEXWInternational freight, insurance, export handling, all transportAdd freight, insurance and handling up to entry into national territoryFOB / FCA / FASInternational freight and insurance from origin port onwardAdd freight and insurance up to entry into national territoryCIF / CIPUsually includes freight and insurance to destination portVerify the included portion; confirm nothing post-entry is bundled inDDPIncludes duties, taxes and inland delivery inside MexicoRemove post-entry transport and Mexican domestic taxes, when separately stated
On paper, the Incoterm is a three-letter code in a corner of the invoice. In practice, it is the map of what your customs value is required to include, and the single most common reason a declared value is wrong.
The MVE turns a declared value into a value you have to prove
Until recently, the Manifestación de Valor was a low-friction document the agente aduanal (customs broker) assembled as part of the service. That is over. As of July 31, 2026, the MVE is mandatory and transmitted electronically through the Ventanilla Única de Comercio Exterior (VUCEM, Mexico's single-window trade platform), under Article 59, fracción III of the Ley Aduanera and Regla 1.5.1 of the Reglas Generales de Comercio Exterior (RGCE, Mexico's general foreign-trade rules). The obligation was first set for late 2025 and moved through several transition windows before the Segunda Resolución de Modificaciones a las RGCE 2026 fixed the mandatory date at July 31, 2026.
What matters for valuation is what the MVE asks for. The value detail is transmitted per commercial invoice, and each incrementable and decrementable has to be detailed against the applicable Incoterm. The declaration is signed with the importer's own e.firma. That signature changes the nature of the work. The value is no longer a figure the broker estimates at the border; it is a figure you certify, and behind every line you certify, the supporting document has to exist: the contract, the freight invoice, the insurance policy, the proof of payment.
This is the materiality shift. A declared value answers the question "what did you put on the pedimento." A proven value answers a harder one: "show me the document behind each number." The MVE moves you from the first question to the second. (For the full picture of who signs and what the MVE requires end to end, see our companion piece on the MVE becoming mandatory.)
Where valuation goes wrong
Two errors account for most of what we see, and they sit on opposite ends of the Incoterm spectrum.
Common mistake: declaring freight as zero under a term that excludes it. An importer buys FOB at 50,000 USD, pays 3,000 USD in international freight and 500 USD in insurance, and enters freight as 0 in the incrementables field. The declared customs value is 50,000 when the correct value is 53,500. Every tax above it, IGI, IVA and the Derecho de Trámite Aduanero (DTA, the customs processing fee), is now calculated on an understated base. The Incoterm field itself is not what the authority sanctions. The understated value is.
The mirror error runs the other way. An importer buys DDP and declares the entire invoice as customs value, including the inland freight and handling incurred after the goods entered national territory. Say 4,000 USD of that 60,000 USD invoice is post-entry cost that Article 66 allows to be removed when separately stated. Declaring the full 60,000 overstates the value and the company quietly overpays on every shipment.
Quick check: pull your last ten pedimentos and confirm that the declared Incoterm and the incrementables field tell the same story. A term that excludes freight, paired with freight declared as zero, is the single fastest discrepancy for a value review to find.
What the law actually does about a wrong value
A value that does not match the operation is not a clerical footnote. The Ley Aduanera treats it in three escalating ways.
When the pedimento carries inexact data, the infraction sits under Article 184 and is sanctioned under Article 185. When that inexact value understates what you owe, it becomes omission of contributions under Article 176, sanctioned under Article 178, calculated against the duties and taxes left unpaid. And when a declared value comes in 50% or more below the transaction value of identical or similar goods under a regime that defers contributions, the law gives that its own heading in Article 176, fracción XII.
There is a second-order risk that lands harder than any single fine. Persistent inconsistencies between what you declare on the MVE, the COVE (Comprobante de Valor Electrónico, the electronic value record) and the pedimento are exactly the pattern that can put a company's standing in the Padrón de Importadores (the importers' registry) under review. A suspended registry stops cargo for everyone downstream of it.
When the valuation logic belongs in-house, and when to bring in help
Across more than 190,000 customs operations a year at 39+ ports on both sides of the border, the values that survive a review are almost never the ones assembled at the moment of clearance. They are the ones where the importer's team had already mapped, term by term, what each Incoterm adds and removes, and had the documents filed before the cargo moved. The MVE did not create that discipline. It simply made the absence of it visible and attributable.
The practical line is this. Routine purchases under a stable Incoterm, with a clean freight and insurance trail, belong inside your own process once the logic is set. The moment to bring in expert help is when terms change, when a supplier shifts from FOB to DDP, when royalties or buyer-supplied materials enter the price, or when you cannot reconstruct the document behind a number you already declared. Those are the cases where a value review now protects you, instead of a SAT review finding you later.
Your Incoterm was always the first instruction your customs value followed. The MVE simply made that instruction one you sign with your own name. The importers who treat the term as a logistics afterthought will keep declaring values they cannot fully prove. The ones who treat it as the first line of their valuation will be the ones whose files hold when the value is finally tested.
Talk to a Joffroy expert about a value-declaration review: a term-by-term check that your Incoterm, your incrementables, and your supporting documents line up before your next MVE is filed.
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