The Federal Taxpayers’ Registry, which the Tax Administration of Mexico regularly maintains as a list of foreign intermediaries and service providers that have registered for VAT, has received an update. As a result, payment service providers (such as those who accept debit or credit cards, bank transfers, online payments, etc.) are not required to deduct VAT from payments made by Mexican customers.
Mexico began charging a VAT on digital services in June 2020. The list of digital service providers in Mexico currently includes 159 companies. Since January 1, 2021, foreign digital service providers that are not registered, do not appoint a legal representative or do not provide a Mexican domicile may have their internet access blocked by the tax authority.
This approach to digital services uses a “positive list.” Withholding VAT, which lists VAT-registered businesses, contrasts with Colombia’s and Paraguay’s negative list strategy, where the tax authorities try to list non-residents who are not VAT-registered but who are providing digital services to consumers.
Effective date: 1 January 2021