The government plans to block applications that are not registered with the Federal Taxpayers Registry (RFC).
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October 28, 2020 7 min read
This article has been translated from our Spanish edition using AI technologies. Errors can occur due to this process.
The opinions expressed by the entrepreneur’s contributors are their own.
To ensure compliance Tax obligations for foreign technology platforms The Mexican government is considering blocking applications that are not registered with the Federal Taxpayers Registry (RFC), improperly withholding taxes, or failing to report their activity to the Tax Administration Service (SAT).
This is part of a draft decree amending and adding various articles of the Income Tax (ISR) and Value Added Tax (VAT) laws so that this legislation has a tighter control mechanism so that digital service providers from other countries do not incur serious tax omissions.
The registration of these companies in the tax register is compulsory; For this reason, the Ministry of Finance and Public Credit (SHCP) has published, by decree in the Official Gazette of the Federation (DOF), updates to the list of companies already registered on the SAT, which add up to 35 until the average of last August 31st.
Likewise the SAT has activated a microsite These technological platforms can register here and view all information on the new federal regulations.
For Victor Aguirre, a lawyer specializing in technology and startups, these proposals represent the country as a global example of tax collection: “In fact, Mexico has always been viewed as a model in the sense that it has implemented measures very quickly. by BEPS, which are fiscal policy proposals. Years ago, I had already introduced transfer pricing, which is multinational. “
Aguirre reiterates that this new legislation provides a “balanced floor” for overseas and national digital businesses as tax convergence encourages competition and the development of innovation. “There used to be unfair competition, but due to a lack of regulation, national and foreign providers of digital services are already in a fair relationship.”
It is also noted that the Organization for Economic Co-operation and Development (OECD) has conducted various studies and programs at a multinational level, such as a company that will have advantages in Mexico strategically transfer them to a country where it will Fall is a low tax rate and that’s where you pay tax. The OECD therefore has an action plan against the erosion of the tax base and the transfer of profits to meet the challenges of the digital economy, taking into account two factors: that it is highly intangible and its importance. “
The bill even provides that for the OECD, the digital economy “is increasingly becoming the real economy … its business models have some key features that may be relevant from a fiscal perspective”.
The change in legislation is necessary because “the law used to say that only the resident is taxed and these provisions are from the last century and are in a world where it is now possible to think someone will Providing you with a service is not sensible in your country of origin, ”Aguirre emphasizes.
Who pays taxes on this proposal?
Providers who provide services in Mexico for which consideration is charged and which are provided through applications or content in digital format over the Internet or other network. They may not even require human intervention. That means they can be automated.
As:
- These for downloading or accessing images, films, text, information, video, audio, music, games, including gambling, other multimedia content, multiplayer environments, retrieval of mobile sounds, viewing online news, traffic information, weather forecasts and Statistics ;; other than downloading or accessing electronic books, newspapers and magazines.
- Those that facilitate mediation between third parties offering services or new goods and their applicants.
- Online clubs and dating sites.
- Those of distance learning or of tests or exercises.
Those who provide access to related audio and / or video multimedia content via the Internet are considered to be taxpayers and the user viewing or downloading the related audio and / or video multimedia content is obliged to do the Levy and pay tax.
This means that users must be informed of the VAT for this service on every invoice and that the invoice must be included on their tax return. The service provider must also inform the SAT of all these processes and pay the corresponding taxes.
How is the tax levied?
If the user’s payment is made by debit, credit, departmental or prepaid card, then the banking institutions and the issuers of those cards must collect the tax.
The collection takes place at the time of payment for the provision of the service, which consists of the granting of access via the Internet to the associated audio and / or video multimedia content, and must take place no later than the 17th of the month following the one in who carried it out.
What should companies do?
- Register in the RFC and process your extended electronic signature. If they are already registered, they need to update their economic activities.
- Appoint a legal representative before the SAT and provide a domestic address to report and monitor tax compliance.
- You must withhold VAT and, if applicable, the ISR from individuals and submit them to the SAT by electronic declaration that they will submit no later than the 17th of the following month.
- Payment of the corresponding VAT (16% on the consideration charged in the corresponding month) is made by means of an electronic declaration that it will be presented no later than the 17th of the following month.
- Issue a digital online tax document (CFDI) for withholding taxes and payment information to every natural person to whom the withholding tax was levied no later than 5 days after the month in which the withholding tax was levied.
- If the recipient of the service so requests, they must issue and electronically send the electronic files in PDF format containing the receipts corresponding to the payment of the consideration, with VAT being expressly and separately included.
- They will provide information on a monthly basis about the operations performed by their broker, regardless of whether they are processing payments.
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