As of 1st June 2020, Mexico will introduce VAT on Digital Services. This obligation will apply to all online services that serve Mexican customers, including global giants such as Amazon, or local giant Mercado Libre.
What will be the subject of taxation?
The taxable services are the ones provided through applications, over the Internet or another network and for which the end-customer paid a fee. Some of the services included are:
Which digital service providers are obligated to pay for this type of tax?
The rule will apply to all suppliers, business-to-business (B2B) and business-to-customer (B2C) suppliers, with a bit stronger focus on B2C transactions.
What should digital service providers do in order to be compliant?
Before all, foreign digital service providers must obtain a tax identification number for VAT purposes by Mexican tax authorities. Also, they must:
The VAT rate on Digital services in Mexico will be 16%.