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Mexico: Business transactions conducted by internet; physical presence not required

Mexico: Business transactions conducted by internet

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.


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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:

  • Advertising provided through a multifaceted interface
  • Mediation or inter-mediation provided by multifaceted digital interfaces (that is, the system that allows different users to interact in such a way that goods or services can be delivered between them)
  • Transmission of data collected from users through digital interfaces

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

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