- New VAT Withholding Requirement: The Mexican tax administration (SAT) introduced a new rule on October 11, 2024, requiring digital platforms that act as intermediaries to withhold 100% of the VAT on sales of goods they facilitate. This applies to both nonresidents without an establishment in Mexico and residents, when the platforms collect and deposit the corresponding considerations and VAT in foreign bank accounts.
- Seller’s Declaration: Platforms must obtain a statement from sellers detailing their foreign bank account and their agreement to have VAT withheld. This statement can be acquired through various means such as websites, applications, or in writing.
- Payment and Reporting Obligations: Platforms must pay the withheld VAT by the 17th of the following month using the “Declaration of payment of VAT withholdings for the use of technological platforms.” Additionally, they must issue a digital tax receipt (CFDI) to the seller within five days of the month following the withholding, detailing the payment and withheld tax.
- Information Submission to SAT: Platforms are required to provide the SAT with specific sales information, as outlined in article 18-J, fraction III of the VAT Law, clearly identifying transactions where VAT withholding was applied.
- Deductibility and Clarifications Needed: The withheld VAT can be deducted by sellers from their total monthly VAT. However, there is ambiguity regarding the rule’s scope, particularly if it applies only to foreign sellers and whether the VAT withholding statement exempts sellers from further VAT obligations in Mexico. The new rules also impose CFDI issuance obligations on digital platforms, even those not previously required to do so.
Source KPMG
