KPMG report: Mexican rulings on exportation of services eligible for 0% VAT

Multinational corporations with Mexican subsidiaries need to properly assess VAT treatment of cross-border operations

Multinational corporations with Mexican subsidiaries

Mexican courts have confirmed in multiple rulings that exported services should be enjoyed outside of Mexico for the 0% value added tax (VAT) rate to apply. Notwithstanding such precedents, in practice, it can be quite challenging to determine where exactly certain services are “enjoyed.” The latest ruling on this issue came from a federal circuit court, which provided additional guidance on how the courts analyze and apply the term “enjoyment” in certain cases.

Multinational corporations with Mexican subsidiaries engaged in service activities—including shared service centers or centralized corporate functions—need to consider the implications of this ruling to properly assess the VAT treatment of their cross-border operations.

Read a February 2024 report* [PDF 221 KB] prepared by KPMG professionals: Mexican Rulings: Exportation of Services Eligible for 0% VAT

* Reproduced with permission from Tax Management International Journal, 1/30/2024. Copyright @ 2024 by Bloomberg Industry Group, Inc. (800-372-1033)



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