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In brief

Derived from the obligation of foreign residents without a permanent establishment to register before the Mexican Federal Taxpayers Registry (for its acronym in Spanish “RFC“) in order to comply with the new value added tax (for its acronym in Spanish “VAT“) provisions imposed on digital service providers, the tax authority is publishing on a bimonthly basis the list of such service providers that have secured their formal inclusion in the RFCs. In this sense, on September 9, 2020, this list was published in the Federal Official Gazette, increasing the number of 13 registered entities to 35.

Bill to amend VAT Law related to digital services rendered by foreign residents

In addition to the above, and in light of the slow progress of having foreign companies registered for purposes of digital taxation in Mexico, the Mexican President submitted a bill to amend the VAT Law on September 8, 2020. Such bill proposes the inclusion of sanctions for non-Mexican residents that fail to register and comply with their digital economy tax obligations, including a temporary restriction or blocking of the right of use of the public telecommunications network in Mexico (including internet). This temporary restriction or blocking of access to internet services derives mainly whenever the non-Mexican resident fails to obtain registration before the RFC, fails to appoint a legal representative for Mexican tax purposes as well as when it fails to comply with its obligation to file three or more monthly tax returns. Furthermore, the bill to amend the VAT Law provides that whenever a non-resident fails to comply with the obligations triggering the temporary suspension or blocking, the registration of the foreign digital service provider before the RFC will be cancelled.

Notwithstanding the above, the proposal to amend the VAT Law also contemplates the possibility to exempt certain suppliers of digital services from registration in Mexico, provided that they operate through intermediaries that in turn comply with the tax obligations inherent to the rendering of digital services in the Mexican market (compliance of tax obligations inherent to the digital service provider as a withholding entity and also to comply with the own tax obligations of the intermediary), and provided that such intermediary makes the corresponding withholding of the VAT triggered for the rendering of digital services by the non-resident.

Finally, please be advised that the initiative to amend the VAT Law is being discussed in the House of Representatives of the Mexican Congress, and we would issue a new alert upon enactment of a final bill, prior to its entry into force.


Juan Carlos Valles is a Partner from the Tax Practice Group and regularly advises clients in the areas of international tax planning, permanent establishment, taxation of non-residents, cross-border transactions, corporate taxes, flat tax and value added tax. Valles previously work as a member of the Firm’s Foreign Trade and Customs Practice Group for several years, where he assisted several companies with legal advice on Mexico’s network of free trade agreements and other legal matters related to the international trade regulation and customs legislation.


Luis Carbajo advises multinationals on international tax planning, M&A, cross-border transactions and other business issues. He is an adviser of the tax committee of the National Maquiladora Council. Luis frequently authors tax articles in Tax Notes International and the Practical Mexican Tax Strategies magazine. He also speaks at various seminars organized by CANIETI, CANACINTRA, Tax Executives Institute, Executive Enterprise Institute, Cámara de Comercio de Bogotá and the local Maquiladora Associations across Mexico. Luis focuses his practice on litigating and lobbying highly complex issues in the energy sector. He has extensive experience advising on permanent establishment issues, inter-company pricing, taxation of non-resident entities and individuals, and other corporate and tax matters such as VAT, assets tax, planning and litigation on social security contributions, and local and municipal taxes. His practice also covers tax planning and transfer pricing, particularly in the energy sector.


Esthefany Rojas Valadez is an Associate in Baker McKenzie's Juarez office.