Worldwide tax guides /VAT on Digital Services in MexicoMexicoTax on Digital Services

VAT on Digital Services in Mexico

VAT Rate on Digital ServicesVAT on Cross-Border Electronically Supplied Services Digital Reporting Requirements for Foreign Sellers Providing Digital Services
Typically 16%YesNo, except for intermediaries

VAT on Cross-Border Digital Services in Mexico

In June 2020, Mexico introduced special rules for foreign digital service providers. Mexico imposes VAT on non-resident providers of digital services for both B2B and B2C transactions. Non-resident providers should register for VAT and apply for a Mexican tax ID number (locally known as the “Registro Federal de Contibuyentes” or RFC) from the Mexican Tax Administration Service (SAT).

VAT Rate: Typically 16% VAT applied to the sale of affected digital services

Digital Services in Scope

The following services should be in the scope of the Mexican digital service rules:

  • Downloading or accessing images, films, text, information, video, audio, music, games, gambling, and other multimedia content, multiplayer environments, obtaining mobile phone ring tones, viewing online news, traffic information, weather forecasts, and statistics.
  • Intermediation between third parties offering goods or services and those seeking them.
  • Online clubs and dating sites.
  • Distance learning or teaching

Exemption:

  • Download or access of electronic books, newspapers, and magazines

Determining the Location of the Mexican Consumer

The recipient of the service should be considered to be in Mexico when any of the following events occur:

  • The recipient has declared an address located in Mexico to the service provider
  • The recipient of the service makes the payment to the service provider through an intermediary located in Mexico.
  • The IP address used by the electronic devices of the recipient of the service corresponds to the range of addresses assigned to Mexico.
  • The recipient has provided a telephone number whose country code corresponds to Mexico to service provider

VAT Registration for Foreign Companies

  • VAT registration threshold for non-resident suppliers of Digital Services: No registration threshold
  • Fiscal representatives: Yes

VAT Returns and payment of taxes

VAT returns for non-residents

Once registered, businesses should need to collect and remit taxes to the Mexican Tax Administration Service (SAT). Note that these are returns for non-resident companies - not to be confused with VAT returns of local companies.

VAT Return Namethere is no specific form, return is done through the SAT software via the foreign resident's tab.
Filing FrequencyMonthly
Annual ReturnNo
Filing DeadlineThe deadline should vary depending on the sixth digit in the taxpayer's RFC number. From the 17th day of the month following the reporting month, the following number of days should be added to determine the filing deadline - one working day should be added if the sixth digit of the RFC is 1 or 2, two working days if the sixth digit is 3 or 4, three working days if the sixth digit is 5 or 6, four working days if the sixth digit is 7 or 8 and five working days if the sixth digit is 9 or 0.
Payment DeadlineSame as the filing deadline
Payment CurrencyMexican Peso (MXN)
LanguageSpanish
Fiscal RepresentativeYes
Input Tax RecoveryNo input tax recovery should be allowed for non-resident providers of digital services
Record Storage5 years, may be stored abroad

Digital Reporting Requirements for Cross-Border Digital Services

There should be no digital reporting requirements for foreign digital service providers.

If requested by the Mexican recipient, foreign providers may be required to provide a PDF file containing the information required by their local jurisdiction (i.e. if the provider is based in the Netherlands, the invoice must meet Dutch requirements). The invoice should contain, at a minimum:

  • Name or company name of the supplier
  • City and country in which it is issued
  • RFC of the supplier
  • Net amount
  • VAT amount
  • Concept or description of the service
  • Issue date and period covered by the invoice
  • RFC of the recipient (if appropriate)

However, if a foreign entity is acting as an intermediary (i.e. electronic platform or marketplace) in the supply of goods or services, it should issue local e-invoices (CFDI) and report them.

For more information about digital reporting requirements in Mexico see E-invoicing and Digital Reporting Guide.

Foreign Intermediaries Withholding VAT

A foreign intermediary (i.e. electronic platform or marketplace) in the supply of goods or services should withhold the following percentages.

  • Supplier is an individual and resident in Mexico and provides a valid RFC: intermediary should withhold 50% of the VAT
  • Supplier is resident in Mexico and does not provide a valid RFC: intermediary should withhold 100% of the VAT
  • Supplier is based outside Mexico: intermediary should withhold 100% of the VAT

VAT amounts withheld should be remitted to SAT by the 17th of the following month.

Income Withholding Tax

In addition to VAT withholding, a foreign intermediary (i.e. electronic platform or marketplace) in the supply of goods or services should withhold income tax in the following scenarios.

  • If the supplier is an individual who provides a valid RFC and is a resident of Mexico:
    • 4.0% for accommodation services
    • 2.1% for land passenger transport services and land freight transport services
    • 1.0% for the sale of goods and services in general
  • If the supplier is resident in Mexico and does not provide a valid RFC:
    • 20% regardless of the type of transaction

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