As of June 1, 2020 Mexico will start imposing VAT on Digital Services, according to the bill approved by Congress back in October 2019. As of June 1, 2020 Mexico will start imposing VAT on Digital Services, according to the bill approved by Congress back in October 2019.
The measure will immediately impact all foreign businesses providing digital services to customers based in Mexico. This applies for example to selling downloadable files such as apps and games, streaming of TV and audio. Businesses will be required to be VAT registered, appoint a local Fiscal Representative and have a Mexican address. GVC can assist with the VAT set up and compliance in Mexico.
Some other points Digital Service Providers should be aware of are:
- During the VAT registration process, there will be a requirement to generate an e.signature.
- The obligation to provide electronic invoices in PDF format to all Mexican customers who require it.
- Payment can be done in the foreign business’ local currency to a Mexican Government bank account outside Mexico.
A service will be considered provided in Mexico, if a customer declares a local address or phone number, has a Mexican IP address, or pays through an Mexican intermediary.
Finally, the standard VAT rate to apply on all digital services provided remotely will be 16%
Since June in soon approaching, it is important for all Digital Services Providers to get ready for the upcoming VAT changes in Mexico. Global VAT Compliance specialises in helping international business be VAT compliant around the world offering VAT solutions to Digital Companies, so if you can foresee these developments impacting your business, do not hesitate to contact us.