MEXICO Law and Practice Contributed by: Edgar Klee and Joel Gonzalez Lopez, Haynes and Boone, S.C.
9.13 Approach to Digital Services Taxation As explained in 9.12 Digital Economy Businesses ,Mexico has imposed VAT rules related to digital taxation and an incipient regulation for certain activities performed using digital platforms. There are currently no proposals to implement new reforms. 9.14 Offshore IP Provisions As explained in 6.4 Taxation of Intangibles Devel- oped by Local Corporations , the use of intangibles developed by local corporations by non-local subsidi - aries is subject to transfer pricing regulations and the arm’s length principle in Mexico.
non-residents, covering the downloading or access - ing of digital content, online clubs and dating pages, digital intermediation services, and distance learning. The regime has since been significantly expanded. Starting 1 January 2026, Mexico extended VAT and income tax withholding rules on digital platforms to include business-to-business (B2B) transactions, an obligation that previously applied only to individual sellers. Platforms must now withhold 50% of VAT and 2.5% of income tax from Mexican business sellers that provide a valid RFC; if no RFC is provided, with - holding rises to 100% of VAT and 20% of income tax. The income tax withholding rate for individual sellers also increased from 1% to 2.5%. Additionally, plat - forms are now required to withhold 100% of VAT on sales by foreign sellers and on transactions where proceeds are paid to foreign bank accounts.
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