Facilitating platforms must withhold VAT to non-resident goods sellers
On 11 October 2024, the Mexican Servicio de Administración Tributaria (SAT) imposed the obligation on digital platforms and marketplaces to withhold VAT on goods sold by their foreign third-party merchants.
This is separate from Mexican VAT on digital services requirements.
Platforms and marketplaces acting as intermediaries
Digital platforms must comply with a VAT withholding obligation by obtaining a declaration from sellers regarding their foreign bank accounts and their consent for VAT withholding on sales made through the platform. This declaration can be secured through digital means or in writing.
Platforms are required to remit the withheld VAT via a “Declaration of Payment of VAT Withholdings for Technological Platform Use” by the 17th day of the month following the month in which the VAT-inclusive sales were collected. Within five days post-withholding, platforms must provide sellers with a CFDI (Digital Tax Receipt), detailing withheld VAT amounts and payments. This CFDI should include the “Services Technological Platforms” supplement as defined by the SAT.
Additionally, platforms must submit relevant information as per Article 18-J, fraction III of the VAT Law, identifying these transactions as subject to VAT withholding.
Global digital platform VAT obligations
Examples of similar VAT withholding requirements are seen in the EU and certain South American countries.
In the EU, the VAT One-Stop Shop (OSS) system allows platforms to report withheld VAT on cross-border digital services. Colombia has mandated VAT withholding by platforms on electronic services provided to local consumers, creating obligations for foreign digital platforms. This harmonizes VAT collection and mitigates compliance burdens for sellers operating across multiple jurisdictions.
