Mexico is one of the countries where the audiovisual entertainment and digital platforms sector is most developed. As stated in the report published by Kantar Media, the country occupied in 2019 the second place in the ranking of population subscribed to streaming services. In this regard, the Mexican government has taken a step forward to adapt to this situation, updating the necessary regulatory compliance regarding taxation for these services.

During the month of May 2020, the first Resolution of Modifications to the Miscellaneous Fiscal Law for 2020, where among others for all companies that provide services through digital or technological platforms, applicable from June 1, 2020.

VAT required for digital services through technological platforms

Residents abroad with or without establishment in Mexico that provide digital services to Mexico, must report and pay through the “Declaration of payment of VAT for digital services”, no later than on the 17th of the immediate month next, the full amount of VAT collected during the month.

Option to calculate withholdings on daily earnings

Legal entities established in Mexico or residing abroad with permanent establishment in the country, as well as foreign entities or legal entities, can calculate the withholdings of the ISR to taxpayers natural persons with business activities that provide goods or services through Internet, also through technological platforms for daily periods, applying the total amount of daily income received by the taxpayer, according to the withholding rates published in the resolution.

Withholdings of the ISR that the technological platforms must declare

Legal entities residing in Mexico or residing abroad with or without permanent establishment in the country, as well as foreign entities or legal entities, must make the entire withholding of the ISR made to taxpayers by individuals with business activities that they  provide through the Internet or technological platforms, through the “Declaration of payment of withholding tax for technological platforms”, no later than the 17th day of the month immediately following the one in which the said retention.

Informative declaration of digital intermediation services between third parties

Residents abroad without an establishment in Mexico that provide digital services to recipients located in Mexico, must provide the tax revenue office with the information of their customers, even if they have not collected the payment and the corresponding VAT, through the “Informative Declaration of digital intermediation services between third parties” and in accordance with the “Declaration filling guide”, no later than the 10th of the month immediately following to which the information corresponds.

Publication of prices of goods and services without publishing VAT expressly and separately

Residents abroad without establishment in Mexico that provide digital services to receivers located in Mexico, may choose to publish or not on their website, technological application, platform or any other similar, the price at which the goods are offered or services in which they operate as intermediaries, without expressing the VAT expressly and separately, as long as the prices include VAT and publish them with the legend “VAT included”.

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Erick Ariel Sotelo

Erick Ariel Sotelo
Tax Manager Auxadi Mexico

Carlos Cano Reyes

Carlos Cano Reyes
Country Manager Auxadi Mexico

All information contained in this publication is up to date on 2020. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.