The Mexican Chamber of Deputies on 5 November 2020 approved modifications and additions to the income tax and value added tax (VAT) laws regarding the taxation of digital services in Mexico.
With this action, the legislation (as approved) will need to be signed by the president and published in the official gazette for the measures to be effective 1 January 2021.
The digital services tax measures were included in proposals presented in September 2020—read TaxNewsFlash—and were approved by the lower chamber but with certain minor changes.
The approved measures include a stricter sanctions mechanism that temporary blocks the ability of foreign digital services providers to offer digital services in Mexico if these providers have not complied with certain obligations including registration, the appointment of legal representative, and implementing an electronic signature. The sanctions mechanism will also apply if the foreign digital services provider fails to file three consecutive monthly VAT and income tax returns or two quarterly informative returns.
As a simplification procedure for digital intermediation platforms, the lower chamber approved a provision to replace the current gradual income tax withholding rates with a fixed rate for each activity, this fixed rate applies with regard to individuals and is based on the total income net of VAT obtained through such platform.
|Activity||Income tax withholding rate|
|Passenger land-transport services and delivery of goods||2.1%|
|Transfer of goods and services||1%|
The proposals that were approved (but without changes by Mexican Congress) include the following:
For more information, contact a tax professional with the KPMG member firm in Mexico:
Antonio Zuazua | +52 81 8122-1938 | firstname.lastname@example.org
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