Mexico: Proof of domicile rule ends VAT registration path for non-resident digital providers
The Mexican Tax Administration Service (SAT) enforced a new proof of domicile requirement that effectively eliminates VAT registration for non-resident digital service providers without a physical presence in Mexico. The change stems from a legal amendment published in the Diario Oficial de la Federación on May 13, 2025.
Key regulatory shift:
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Under the new rules, all taxpayers, regardless of their location or tax regime, must submit proof of domicile in the entity’s name to maintain or obtain tax registration.
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Acceptable documentation includes utility bills or Mexican bank statements issued in the name of the non-resident entity — a high threshold for companies operating remotely.
Impact on non-resident digital platforms:
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Previously, foreign providers could comply with Mexico’s VAT on digital services through a simplified registration framework.
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The updated interpretation by SAT requires in-person procedures and local documentation, including a valid Mexican address that meets tax domicile standards.
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Foreign entities without a local establishment or local utilities now cannot update or correct their VAT registration through digital channels and are rejected at SAT offices due to lacking documentation.
Compliance consequences:
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The policy change significantly disrupts existing VAT compliance for non-resident platforms.
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Foreign providers may be forced to obtain local services (e.g., internet subscriptions) solely to produce valid proof of address.
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Others may face the choice of suspending compliance or seeking costly workarounds involving third-party local representation.
Industry response:
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Tax advisors and businesses are urging SAT to clarify procedures for digital service providers and ensure that implementation remains aligned with the original legislative intent.
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Until guidance is provided, the move is widely viewed as a de facto barrier to non-resident VAT registration, with implications for both tax collection and market access.
VAT/GST rates 2024 in Americas
| Country | Standard VAT/GST Rate | Reduced Rates |
| Antigua and Barbuda | No VAT tax but standard sales tax is set at 15% | Reduced rate of 14% |
| Argentina | The standard VAT rate is 21%. (enhanced rate of 27% for several metered utilities) | Reduced rate of 10.5% |
| Bahamas | Standard VAT rate of 10% | |
| Barbados | The standard VAT rate is 17.5% (Super rate of 22% mobile voice & text services) | A reduced rate of 22%, 10%, 7,5% |
| Belize | There is no value-added tax as such. Belize instead introduced a General Sales Tax in January 2006, which applies to a wide range of goods and services at a 12.5% rate. | |
| Bolivia | The standard VAT (IVA) rate is 13% under Article 15 of the VAT Law | |
| Brazil | Brazil imposes a state tax equivalent to VAT (ICMS) This rate is imposed by each state and is subject to a limit set by the federal senate. The rates can vary in the states from 17% to 18% (Rio de Janeiro has 20% as an exception). and the highest rate can typically reach 25%. | 7% |
| Canada | The standard federal Goods and Services Tax (GST) rate is 5% | |
| Chile | The standard VAT rate is 19%. | |
| Colombia | The standard VAT (IVA – Impuesto sobre las Ventas) rate is 19% | 5% |
| Costa Rica | The standard VAT rate is 13%, the same rate as the sales tax. | 4%, 2%, 0,5% |
| Ecuador | The standard VAT rate is 15% | 5% |
| El Salvador | The standard VAT (IVA) rate is 13% | |
| Faroe Islands | The standard VAT rate is 25% | |
| Guatemala | The standard VAT rate is 12% | |
| Mexico | The standard VAT rate is 16% | 8% |
| Panama | The standard VAT rate in Panama is 7%. There are supplementary rates of 10% and 15% | |
| Peru | The standard VAT rate is 18% | Effective September 1, 2022 until December 31, 2024, a 8% reduced rate will apply to micro and small suppliers of restaurant, hotel, and tourist accommodation services that receive at least 70% of their income from these supplies. |
| Puerto Rico | The sales and use tax (SUT) rate is 11.5% | 1% |
| Uruguay | The standard VAT rate is 22% | 10% |
| USA | There is no VAT in the USA. U.S. state sales and use tax rates vary between 2.9% and 7.25% | Reduced rates are offered for sales of specific products. |
| Venezuela | The standard VAT rate is 16% | 8% |