Many countries in LATAM, such as Mexico, Argentina, Chile, Colombia, Costa Rica, Uruguay, Paraguay and Ecuador, have taken full advantage of the digital economy’s growth by taxing digital services. The result has been not only prodigious increases in tax revenues, but also significant increases of tax compliance on those digital platforms that sell goods and services.
For example, Mexico, Chile and Ecuador as previously did Uruguay and Colombia, quickly took advantage of this uptick in digital economic activity by instituting VAT on digital services. On June 1, 2020, Mexico imposed a 16% VAT on foreign business-supplied digital services. As a result, foreign businesses operating in Mexico must register for VAT in Mexico and remit taxes monthly.
Source CPA Practice Advisor
