Mexico: Tax legislative changes for 2021 and digital services
Mexico: Tax legislative changes for 2021
The Miscellaneous Tax Resolution for 2021, as published in the Official Gazette on 29 December 2020 and effective 1 January 2021, includes measures regarding value added tax (VAT) and digital services.
The changes to the VAT rules for digital services include the following:
- As a result of modifications to the VAT law for 2021, it is clarified that foreign residents (whether individuals or legal entities) providing digital services through an intermediary that collects and withholds 100% of the VAT on the sales or transaction price for the foreign residents, are not required to register in the federal tax registry (RFC).
- The legislative measures repeal a requirement for those providing digital “intermediation” services between third parties to file an update of economic activities. This reporting requirement was reflected on the form 4/PLT "Notice of the update of economic activities and obligations for platforms that provide digital intermediation services between third parties.”
- The legislation removes the ability to file a PDF for the withholding tax reporting by digital platforms that provide digital intermediation services between third parties. Rather, beginning in 2021, electronic withholding invoices (CFDI) and payment information must be submitted with the "technology platform services" add-in.
- The legislation also includes a rule to the list of requirements to issue the CFDI by residents in Mexico that provide intermediation services between third parties to suppliers of goods and services residing abroad. This rule is included and refers to transactions under which 100% of the VAT is withheld.
- The ability to calculate income tax withholdings on daily basis when individuals obtain income through intermediation platforms is eliminated (given that for 2021, the VAT law establishes single and fixed withholding rates depending on the category of activity conducted).
- The rule that allowed the publication of prices of goods and services without specifically and separately breaking down the amount of VAT is moved to the VAT Law for 2021.
- In various rules, the concept of individuals who sell goods, provide services, grant accommodation or provide for the “temporary use or enjoyment of goods” through technological platforms is expanded.
- The legislation modifies the rule for determining the income limit and treating the withholding made by the technological platforms as the final payment. Also, the legislation withdraws a rule that allowed individuals with business activities that obtain income from operations through technological platforms to credit the income tax withholding.
- There are new rules for individuals with business activities of selling goods or providing services through the internet via technological platforms. Regarding income received directly from purchasers of the goods or services, these individuals (if considering the tax paid as a “definitive” payment) must determine their taxable profit, calculate their income tax, and credit the tax withheld by the technological platforms and make the advanced income tax payment by submitting a return (known in English as the “Income tax payment of individuals in technological platforms return").
For more information, contact a KPMG tax professional in Mexico:
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