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Mexico: Extending its VAT system to cover digital services

Mexico has announced plans to extend its VAT system to cover digital services providers to collect VAT at a rate of 16% on the sale of certain goods and services in Mexico.

New rule implemented from 1 June 2020

This will come into effect from 1 June 2020 and will apply to all suppliers – the reform does not distinguish between B2B and B2C transactions.

At present, foreign businesses that provide digital services in Mexico do not charge VAT on their sales.

This new rule will attempt to remove the advantage non-residents have over Mexican resident providers.

New orders in place for businesses and VAT registration

Businesses will be required to be VAT registered, appoint a local Fiscal Representative and have a Mexican address.

The following list pf providers are subject to the rules and responsible for the collection, reporting and payment of the VAT.

  • Category 1: Providers of downloading/access to images, movies, information, music, text, video, gaming, news online, weather, traffic, online clubs, dating sites and other multimedia content, on-line learning, tests and exercises. Examples of companies affected – Uber, Netflix & AirBnB.
  • Category 2: Those that perform intermediation services between potential sellers and buyers of products and services.


Global VAT Updates relating to Covid-19

As businesses begin to realise the impact that the fight against the Coronavirus will have, tax authorities have begun to communicate simplification and deferment measures to help affected businesses. At Taxback International, we are continuing to monitor this situation and will provide updates as they are released. You can see the latest global tax and VAT updates for COVID-19 by clicking here.

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