Since its inception, the digital platform tax has proven to be a resounding success, with Mexico's Tax Administration Service (SAT) collecting about US$476 billion through levies on digital giants such as Airbnb, Netflix, Spotify, Uber and Amazon, among others.
“The implementation of this global minimum tax could yield approximately US$1.78 trillion in tax revenue for Mexico,” says Gabriel Yorio, Deputy Minister of Finance. Apart from being substantially effective, this taxation approach seeks to ensure that foreign companies operating across multiple jurisdictions are treated fairly from both a tax and economic perspective.
The tax dates back to September 2019, when the Ministry of Treasury and Public Credit (SHCP) introduced a pivotal tax initiative aimed at optimizing revenue collection from foreign companies providing services within Mexico. As a result, the SAT implemented the digital platform tax on June 1, 2020, imposing a percentage-based Value-Added Tax (VAT) on digital companies, with a particular focus on those engaged in mobility services, food delivery, mass content streaming and various other activities.
Currently, there are active discussions surrounding the potential implementation of a standardized global minimum tax for foreign corporations, designed to ensure fair and equitable tax treatment for multinational enterprises operating in multiple jurisdictions. Foreign digital platforms conducting business in Mexico must fulfill specific fiscal obligations, including detailing the price of their services or products, filing monthly and annual tax returns, issuing the corresponding CFDI to their clients and making the relevant tax payments within established deadlines.
Mexico’s SAT also holds the power to restrict internet access for unregistered corporations, a stringent measure that aims to enforce tax compliance among foreign companies. As of today, a total of 395,675 individuals have been identified as registered under the Federal Taxpayers Registry (RFC), deriving income from technology platforms such as Rappi, Uber, Didi and others.
Individuals that fail to register their Taxpayer Identification Number (RFC) on digital platforms are obliged to pay from 20% up to 36% of their Income Tax (ISR) to SAT. Conversely, when taxpayers do register their tax information on the platforms, the percentage of taxes withheld depends on the services offered by each company. For example, real estate services have a tax retention rate of 4%, while goods and services are subject to a 1% income tax retention.
The taxation of digital companies in Mexico has proven to be an effective means of augmenting tax revenue for the country. However, amid the pursuit of global fiscal equity, a broader and more sustainable fiscal reform is essential to strengthen public finances and support the country's economic growth in the future.