Mexico VAT Withholding: New Rules for Digital Platforms in 2024

The Mexican government constantly updates and adds new requirements and obligations on digital platforms. After extending the requirements for foreign digital service providers that want to register for the first time in July, the Servicio de Administración Tributaria (SAT), the Mexican Tax Administration, presented new requirements for digital platforms in October.

Earlier in October, the SAT  presented the Second Resolution of Modifications to the Miscellaneous Fiscal Resolution for 2024, introducing VAT withholding requirements.

The Impact of New Requirements

The new VAT withholding requirement introduced by the SAT requires digital platforms that facilitate the sales of goods between non-residents not established in Mexico and Mexican residents to withhold 100% of the VAT from the transaction facilitated.

VAT withholding requirements apply when digital platforms collect the payment and VAT for said transactions on behalf of the seller and transfer this amount to the bank or accounts outside Mexico.

To fulfill this obligation, the digital platform must obtain sellers' statements about their foreign bank accounts and their consent to the digital platform withholding the VAT. Digital platforms can define how they will secure these statements freely through their websites, applications, e-mail, or other means.

The due date for paying the withheld VAT is the 17th of the month after the VAT was collected. The due VAT is paid through the Declaration of payment of VAT withholdings for using technological platforms.

One additional obligation imposed on digital platforms is to issue a digital tax receipt or CFDI to the seller that includes information on withheld VAT and other payment information. The CFDI must be issued within five days of the month following the VAT being withheld.

Conclusion

The requirements presented for digital platforms could be more precise as they need to specify whether goods need to be located in Mexico or abroad when the sale is made. However, it could be concluded that they are imposed on foreign sellers, either businesses or individuals, who sell goods through digital platforms. 

In addition, it is unclear if the obligation to withhold VAT only applies if the foreign seller provides the needed statements. Furthermore, what happens if the seller does not give such statements and what digital platforms should do in that case remains.

Therefore, if these gaps create problems for all involved parties, the SAT could provide further clarification and guidance.

Source: KPMG, VATabout - Mexico: New Requirements For Foreign Digital Service Providers