Will Digital Service Providers Face New Taxes in Mexico?

Senior Counsel Eugenio Grageda commented on the current Digital Service Tax (DST) legislation that was proposed in Mexico in October. The bill would tax companies that provide digital services like social sharing sites, Facebook, and online retailers that connect users to a third party such as Airbnb. Many do not believe that the current legislation will be approved as there are many grey areas and loopholes that would make it impossible to enforce. Mr. Grageda discussed that there would not be a straightforward relationship between the time and effort a user puts into their content and the content's value for the company to apply a tax to.

"We foresee enforcement limits and minimum results derived from the difficulty of its implementation and easy avoidance given the bill’s current loopholes. Instead of looking to its European peers, Mexico should be looking at Latin America to determine the best practices to impose a levy over digital activities," stated Mr. Grageda.

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