Mexico Sets Tax For Foreign Companies

A new VAT for foreign companies that provide digital services in Mexico entered into force this week. All companies in the country that have businesses have to pay the 16 percent tax, despite not having residence there.

The firms impacted include betting providers, gaming sites, as well as audiovisual content and transportation networks such as Amazon , Netflix, Uber, and PlayStation.

The new tax comes into force thanks to the December 2019 agreed 2020 Economic Package which aims to increase taxes around the country and establish equal competition between Mexican and foreign companies.

The VAT reaches digital platform services which allow “the download or access to images, movies, text, information, video, audio, music, games, including games of chance, as well as other multimedia content, multiplayer environments, obtaining mobile tones, online news viewing, traffic information, weather forecasts and statistics.”

In Mexico the current regulatory framework does not separate the land-based industry from the online gambling industry. Both are subject to a 30 percent tax (Tax Special on Production and Services) without distinction and with residence in the country.

Earlier this year, Leonel Cota Montaño was appointed Secretary-General of the ‘Dirección General de Juegos y Sorteos’ (Games & Lotteries Mexico) games supervisory department.

SEGOB manages the Department of Dirección General de Juegos and is responsible for granting the requisite licences for the establishment of Mexican casinos and lottery concessions, operating in cooperation with local governments of the territory.