On 11th February 2020, the Mexican Government approved the bill imposing a tax on digital service tax from foreign countries. Value-Added Tax (VAT) of 16% will be levied on digital services provided to recipients in Mexico with effect from 1 June 2020.
The rule is applicable to all suppliers even if it is a B2B transaction.
The scope of the Digital Service Tax (DST) will cover the services provided through any online application such as audio streaming, video, images, statistical analysis, teaching, news, online clubs, etc.
The recipient is deemed to be in Mexico if:
- He/she is a resident of Mexico
- Payment is made through an intermediary
- The telephone number provided to a service provider has Mexico’s country code
- The IP address of the recipient corresponds to a range addresses assigned to Mexico
The foreign digital service (FDS) providers will have to register for Value-Added Tax (VAT) in Mexico and should obtain a tax identification number(TIN). The service provider will be required to appoint a legal representative in Mexico for notification purposes. The registration will begin from 1 June 2020 and should be completed by 30 June 2020.