Legislation concerning business transactions conducted via the internet would aim to reach and impose tax on income from activities of entities that may have no or very little physical presence in Mexico.
Mexico’s income tax (impuesto sobre la renta—ISR) generally is imposed based on the location of the functions that generate value and not necessarily with respect to the location of the users or customers. The new law would aim to prevent the erosion of the tax base. It is estimated that the value of the electronic market in Mexico was 329,000 million pesos in 2016, generally conducted by companies without a physical presence in Mexico.
The legislation would aim to address this tax gap and proposes to tax the following services offered in Mexico:
An explanatory memorandum to the legislation mentions that those entities that conduct these types of services (regardless of the place of their incorporation) would be considered to be subject to tax in Mexico. However, in the specific article itself, reference is made to residents in Mexico or foreign residents having a Mexican permanent establishment with a tax rate of 3% applicable to income exceeding 100 million pesos.
Read a September 2018 report (Spanish) prepared by the KPMG member firm in Mexico
© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.