Value Added Tax to the Provision of digital services

 Professional related: Manuel Tamez   |      September 26th, 2019

The tax reform initiative for fiscal year 2020 contemplates the incorporation of Chapter III Bis to the Value Added Tax (“VAT”) Law, which establishes certain obligations for residents abroad without a permanent establishment in Mexico that provide digital services to recipients located in national territory.

For these purposes, the service is considered to be provided in national territory when the recipient of said service is located in such territory. In this respect, the recipient of the service is deemed to be located in national territory when:

I. The recipient indicates an address located in Mexico.

II. Payment is made through an intermediary located in national territory.

III. The IP address used corresponds to addresses assigned to Mexico.

IV. The recipient indicates a telephone number with a Mexican country code.


Additionally, the following are considered digital services:

I. Download or access to images, movies, text, information, video, audio, music, games, news, traffic information, weather forecasts and statistics; the download or access to electronic books, newspapers and magazines is excluded.

II. Intermediary services between third parties that are suppliers of goods or services and their clients, except those intended for the sale of used movable property.

III. Clubs and online dating websites. 

IV. Distance learning, tests or exercise services.


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