Mexico: Tax authority clarifies definition of digital intermediation services
Amendment to the definition of intermediation of digital services for purposes of the Mexican VAT law
The Mexican tax administration (SAT) on October 11, 2024, issued the Second Resolution of Modifications to the Miscellaneous Fiscal Resolution for 2024, which includes an amendment to the definition of intermediation of digital services for purposes of the Mexican value added tax (VAT) law.
Under the Mexican VAT law, the provision of digital intermediation services by nonresidents is taxable in Mexico if the customer (business or individual to whom the service is provided) is in Mexico. The SAT recognizes that the current tax legislation does not define the concept of digital intermediation service. In this respect, the SAT clarifies that that digital platforms are considered to provide intermediary services when, in exchange for payment or compensation, they offer or allow, through their website, application, or any other digital network, their clients to offer goods or services to third parties.
This applies even in cases when digital platforms providing intermediary services state that:
- They only constitute online stores (Internet page, application, or another digital network), notwithstanding that, in addition to offering and selling goods of their property or directly providing services to demanders of goods and services through these stores, they put other suppliers of goods or services in contact with the demanders of the same
- The services or goods offered are the exclusive responsibility of the suppliers and that these platforms do not intervene in the negotiation, price setting, and service conditions, presenting themselves only as online aggregators, transport network companies, or any other denomination
In this regard, any digital platform that provides digital intermediation services through its website, application, or any other digital network, when sellers and buyers agree on the terms and prices or compensation of the offered goods or services, is considered to be providing intermediation services between third parties and must comply with the obligations established in the VAT law, including the obligation to withhold taxes, when applicable.
KPMG observation
Nonresident digital platforms that have so far relied on the lack of definition of the term “digital intermediation services” may need to review their position in view of the SAT’s clarification. In this respect it should be noted that nonresidents are facing increasing challenges with registering under the nonresident digital services rules in Mexico (read TaxNewsFlash).
For more information, contact a KPMG tax professional:
Antonio Zuazua | azuazua@kpmg.com.mx
Philippe Stephanny | philippestephanny@kpmg.com