Mexico: Tax provisions affecting digital platforms in 2026 tax reform

Mexico’s tax reform package was published in the Official Gazette on November 7, 2025, introducing proposals to tighten value added tax (VAT), excise tax (IEPS), income tax (IT), and federal tax code (CFF) rules. The reforms will enter into force on January 1, 2026, with a specific exception as described further below.

The following discussion examines the effects of these reforms on digital platforms.For discussion on the initial reform proposal, read TaxNewsFlash. 

Expansion of withholding mechanism on transactions made through digital platforms facilitating the sale of goods and services when they collect the price on behalf of the seller

• The reforms extend the VAT and IT withholding regime to Mexican legal entities (B2B), applying the same logic currently used for Mexican individuals. In this respect, digital platforms are required to withhold:
• o    50% VAT withholding and 2.5% IT, when the seller (legal entity) provides a Mexican tax ID (RFC) to the digital platform
• o    100% VAT withholding and 20% IT when the seller does not provide an RFC
• Additionally, platforms are required to withhold 100% VAT in the following scenarios:
  • Sales of goods made by nonresidents when the goods are in Mexico
  • When the price of the sales, services, or temporary use or enjoyment of goods is deposited into foreign bank accounts, regardless of whether the seller is Mexican or nonresident, provided that the transaction constitutes Mexican-source income under VAT law; payment into a foreign account, by itself, does not create nexus for withholding purposes
• Platforms are required to issue e-invoices (CFDI) of withholding for the above-mentioned transactions.
• Platforms are also required to report information for all sellers, including legal entities, nonresidents, and Mexican sellers with offshore settlements—even if the platform does not process the payment. The SAT will issue further administrative rules clarifying the scope and compliance requirements.
• The reform aims to address avoidance schemes, such as individuals posing as legal entities or nonresidents using Mexican RFCs to bypass platform obligations.
• Finally, the IT withholding rate applicable to Mexican individuals who sells or provide services through intermediation platforms will increase from 1% to 2.5%.

Online betting and sweepstakes

•  The excise tax rate on betting and sweepstakes will increase from 30% to 50%.
• The reform now explicitly includes online betting and sweepstakes offered by nonresidents, with or without the authorization or permits to operate issued by the government, aligning the place of taxation with the customer’s location in Mexico.
• The 50% excise tax rate applies to both business-to-business (B2B) and business-to-consumer (B2C) transactions, whether offered directly by the digital provider or through intermediation platforms.
• Digital intermediary platforms that provide digital services are required to withhold 100% of the IEPS from both domestic and foreign service providers when collecting the price and corresponding excise tax on behalf of the digital service provider. Digital intermediary platforms are required to issue e-invoices (CFDI) of withholding for the above-mentioned transactions.
• Foreign providers and platforms are required to obtain an RFC, appoint a legal representative, tax domicile, collect and remit the excise tax, among other compliance obligations similar to current digital service rules for VAT. Noncompliance would result in the temporary suspension of Internet access to the platform (“kill switch”).

Video games with violent, explicit or adult content

• The reform introduces an 8% excise tax on the sale of video games with explicit violent or adult content sold in “physical format” to B2C customers in Mexico, in addition to the 16% VAT. Imports are excluded from this rule.
• The excise tax also applies to the access or download of such video games regardless of whether the content is paid for or offered for free. For free in-scope video games that also include additional payable content within the game, the 8% excise tax applies to the price of such additional content, in addition to the 16% VAT. In cases when access is granted through a subscription or membership that includes mixed content, and the taxable content is not itemized separately, the law presumes that 70% of the total price corresponds to content subject to the 8% excise tax rate.
• If these video games are provided by foreign platforms or providers, they must register with the SAT, obtain a Mexican tax ID (RFC), and comply with similar obligations as those applicable under the digital services VAT regime.
• Digital intermediary platforms that provide digital services are required to withhold 100% of the IEPS from both domestic and foreign service providers when collecting the price and corresponding excise tax on behalf of the digital service provider. Digital intermediary platforms are required to issue e-invoices (CFDI) of withholding for the above-mentioned transactions.
• In terms of new fiscal responsibilities, providers and platforms facilitating the sale of such video games are required to:
  • Identify which video games are considered subject to the tax (violence classification criterion)
  • Periodically report to the SAT the revenues obtained from these sales
  • Issue tax receipts detailing the tax paid, separating it from other indirect taxes such as VAT
• Non-compliance result in the temporary suspension of internet access to the platform (kill switch).

Real-time access to platform data

• The reform introduces a new requirement for digital platforms, both foreign and Mexican, to provide the SAT with online, real-time access to operational data and records related to Mexican transactions. The SAT will publish technical specifications through general administrative rules. This provision will enter into force on April 1, 2026, to grant a reasonable period for digital service providers to make the necessary technological and organizational adjustments.
• Non-compliance may result in temporary suspension of internet access to the platform (kill switch).
• As part of the reform to combat false CFDI schemes, the federal tax code now includes provisions that extend criminal liability—ranging from two to nine years in prison—to digital service platforms owners. Specifically, platforms defined under the VAT law, as well as their owners, who allow the posting of advertisements for the acquisition or sale of CFDIs that support non-existent operations, false transactions, simulated legal acts, or false invoices, will be subject to the same penalties as those who issue, sell, or use such CFDIs.

KPMG observation

• B2B exposure: Marketplaces facilitating B2B transactions would be subject to VAT withholding and reporting obligations, expanding the compliance perimeter beyond B2C.
• Registration and nexus: Nonresident platforms offering digital services to Mexican users—especially in betting or sweepstakes—may face new excise tax registration and compliance obligations, in addition to VAT.
• Operational adjustments: Platforms must reconfigure tax engines to apply differentiated withholding logic (e.g., RFC-present vs. absent; offshore settlements) and build full-population reporting infrastructure.
• Dual compliance: Operators may need to manage parallel VAT and IEPS obligations, including reporting, withholding, and technical integration.
• Data readiness: Real-time data access requirements will demand system-level mapping and governance aligned with SAT specifications.
• Risk of service disruption: Non-compliance could lead to temporary blocking of services in Mexico, reinforcing the need for proactive readiness.
• Content moderation protocols: The reform introduces direct criminal liability for digital service platforms and their owners who knowingly or negligently allow the publication of ads offering false CFDIs. This significantly expands the compliance and legal risk perimeter, especially for marketplaces and intermediaries facilitating transactions. As a result, platforms must implement robust content moderation protocols to detect and block ads related to false invoicing schemes. Governance frameworks should include preventive controls to avoid the dissemination of CFDI-related content that could be deemed illegal under the new provisions of the CFF.

These measures form part of the 2026 Economic Package, published in the Official Gazette on November 7, 2025. The provisions will take effect on January 1, 2026, except for the requirement for digital platforms to provide real-time access to operational data, which will apply starting April 1, 2026.

The SAT is expected to issue administrative rules to clarify registration, nexus, reporting, withholding, and compliance processes for each provision. Since these rules do not require legislative approval, they may be released at any time; however, most are expected before year-end, while those related to the real-time data access obligation may be issued as late as April 2026.

For more information, contact a KPMG tax professional:

Antonio Zuazua | azuazua@kpmg.com.mx

Philippe Stephanny | philippestephanny@kpmg.com

Ramon Frias | ramonfrias@kpmg.com