There are countless platforms, applications, internet pages, where their owners are residents abroad and do not have a permanent establishment in the country, which were not required to pay taxes in Mexico until 2020.
For the purposes of the Value Added Tax Law, a digital service is defined as services that:
“They are provided through applications or content in digital format through the Internet or another network, fundamentally automated, and may or may not require minimal human intervention, provided that a consideration is charged for the aforementioned services”
The digital services provided by residents abroad without a permanent establishment in the country that are included in the Value Added Tax Law are:
a) Downloading or accessing images, movies, text, information, video, audio, music, games, including games of chance, as well as other multimedia content, multiplayer environments, obtaining mobile tones, viewing news on line, traffic information, weather forecasts and statistics.
b) Those of intermediation between third parties that are suppliers of goods or services and the applicants thereof.
c) Online clubs and dating sites.
e) Distance learning or tests or exercises.
When a resident abroad provides some of the digital services mentioned above to a resident in Mexico, they must comply with the following obligations:
a) Register with the Federal Taxpayer Registry (RFC)
b) Offer and collect, together with the price of their digital services, VAT
c) Provide the SAT with information on the number of services or operations performed
d) Calculate and pay VAT for the provision of digital services each calendar month
e) Issue electronic invoices when the recipient of the service requests it
f) Assign a legal representative and a domicile in Mexico
g) Process the advanced electronic signature (e.firma)
In case of non-compliance, the tax authority in Mexico has the power to temporarily block access to the provider's digital service until it complies with its tax obligations.
If you dedicate yourself to providing digital services outside of Mexico and want to do it in the country, we invite you to contact us for specialized advice.
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