Netflix, Uber or Spotify: Mexico proposes suspending foreign digital platforms that do not pay taxes.

Sep 25, 2020 | Digital Services, VAT Updates

Digital Services
The professor of communication and technological innovation Rubén Darío Vázquez warns that this could affect the final cost to consumers.

Mexican government would be willing to block applications such as Netflix, Uber and Spotify in case these popular digital platforms refuse to pay taxes in the Latin American country, according to the latest national budget planning.

The Executive raised the possibility of suspending the digital services of foreign companies that do not pay taxes in accordance with the provisions of the local treasury. Among the evasions considered, the Value Added Tax (VAT) and the lack of informative returns stand out.

For the professor of communication and technological innovation Rubén Darío Vázquez, one of the main complaints of companies is that this regulation would raise, in addition to new tax burdens, “to deliver the tax data of the people who use these platforms.” Thus, the expert remarks, the firms “will have to provide all the information of the users, in accordance with Mexican regulations.”

“It will be forwarded to the pockets of users”

Previously, Mexico had already established a law that obliged these foreign digital companies to pay a tax of 16% as of 2020, to match competition with other national companies. However, this was answered with price increases for consumers. In cases like Uber, that tax was passed on to drivers, who ended up paying the additional charge.

In this case, Vázquez considers that the new official determination “is going to hit users’ pockets.” Meanwhile, as the coronavirus pandemic progresses, e-commerce in Mexico is expected to grow 60% by the end of 2020, compared to the previous year.

Source: LaJornada

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