close
Share with your friends

Mexico: VAT and digital services, foreign residents without permanent establishment

Mexico: VAT and digital services, foreign residents

Rules have been issued concerning how to address the value added tax (VAT) with regard to customer refunds, discounts, and cancelations of services provided by digital platforms of foreign residents not having a permanent establishment in Mexico.

1000

Related content

The rules—published on 29 May 2020—follow the 2020 tax reform introduction of VAT with regard to digital services provided through an online platform. Read TaxNewsFlash


Refunds to customers of amounts collected by platforms operating as intermediaries of digital services

The rules address the treatment of customer refunds of goods or cancelation of services when the digital platforms operate as intermediaries. In these situations, the digital platform is to refund the amount collected (VAT included) to the customer. If the amount of VAT related to the customer refund has already been remitted to the tax administration (Servicio de Administración Tributaria—SAT), the platform then may reduce, over the following months, its VAT remittances to the SAT by the amount of the customer refund (no VAT included) from the total of transactions subject to VAT, by applying the general VAT rate of 16% and until the VAT remittances reflect the applicable customer refunds. This reduction mechanism will be possible only if the platform has a Mexican tax identification (ID) number and issues an expense receipt (CFDI egreso) that: (1) includes the Mexican tax ID of the customer; and (2) reflects the transaction’s gross amount and the VAT amount separately.


Cancelations, customer refunds, and discounts of services by individuals that provide services on digital platforms

In instances of service cancelations, customer refunds or service discounts for which the digital platform imposed VAT, individuals providing such services may reduce the amounts reported to the SAT (no VAT included) on an amended VAT return for the corresponding month, thereby effectively canceling completely or partially this transaction. This mechanism is available if the individual issues a corresponding expense receipt (CFDI egreso) with the gross amount of the transaction reported and VAT separately stated. In instances of service cancelations, the corresponding invoice must also be canceled.


Cancelations, customer refunds, and discounts of services by individuals that provide services on digital platforms that use VAT withholdings as final payment

For service cancelations, customer refunds or service discounts when the individual treats the VAT withholdings by the digital platform as a final payment, the VAT refund will be processed, as follows:

  • For refunds and discounts, the corresponding expense receipt (CFDI de egreso) must be issued.
  • For cancelations, the corresponding receipt must be cancelled.
  • A refund request must be filed with the SAT that includes specific documentation: (1) the processing file 6/PTL; (2) the receipt made or cancelled; and (3) a receipt of withholdings and payments issued by the digital platform or the VAT return, as appropriate.


For more information, contact a KPMG tax professional in Mexico:

Antonio Zuazua | +52 (81) 8122 1938 | azuazua@kpmg.com.mx

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.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal