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Mexico Imposes 16% Digital Services VAT

Mexico Imposes 16% Digital Services VAT

Mexico has joined the growing number of companies to implement VAT on eCommerce and digital services that are provided to Mexican residents by non-resident businesses.

The 16% VAT levy and it’s registration and compliance rules will take effect from 1st June 2020 and will not differentiate between B2B and B2C suppliers. Meaning whether you provide digital services supplied to the consumer or to a business, you will have to register for VAT.  will take effect Mexico has officially joined the growing list of countries imposing some sort of digital tax. Mexico's Congress of the Union passed an amendment to the Value-Added Tax Law that will allow for the taxation of online sales made to customers based in Mexico, regardless of whether the supplier has a physical presence in-country. The new rules will take effect on 1 June 2020.

Mexican digital services VAT will be charged on the following services: 

  • Downloading or accessing images, movies, music, text, information, video, gaming (including gambling), ring tones
  • Viewing of online news, traffic, weather
  • Online clubs
  • Dating websites
  • Distance Learning platforms, tests and exercises
  • Multimedia content

The legislation around what deems the consumer of the digital services as a Mexican resident is as follows: based in Mexico is determined at checkout by the following triggers:

  • A Mexico-based intermediary is used to make a payment;
  • The customer's phone number or address is in Mexico;
  • A Mexican IP address is used.

Digital suppliers to Mexico are advised to ensure there is a distinction between the taxable services and non-taxable services on their invoices or face some penalties. 

vatglobal offers assistance in the registration and VAT compliance procedures for Mexico. If you think your digital company may have to register in Mexico, contact us today and we’ll ensure your business remains 100% compliant according to the new legislation.

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