A new VAT came into force this week for foreign companies that provide digital services in Mexico. All companies that have businesses in the country must pay the 16% tax, despite not having residence there.

The affected companies include betting operators, gaming platforms, as well as audiovisual entertainment and transport services, such as Amazon, Netflix, Uber, PlayStation, among others.

The new tax comes into force thanks to the 2020 Economic Package which was approved December 2019 and aims to increase taxes throughout the country and create fair competition between Mexican and international companies.

The VAT reaches services from digital platforms that allow “the download or access to images, movies, text, information, video, audio, music, games, including games of chance, as well as other multimedia content, multiplayer environments, obtaining mobile tones, online news viewing, traffic information, weather forecasts and statistics.”

The current regulatory framework in Mexico doesn’t separate the land-based industry from the online gambling sector. Both, without distinction and with residence in the country, are subject to a 30% tax (Tax Special on Production and Services).

Earlier this year, Leonel Cota Montaño was appointed as the Secretary-General of gambling supervisory department ‘Dirección General de Juegos y Sorteos’ (Games & Lotteries Mexico).

The department of Dirección General de Juegos is supervised by SEGOB, and is charged with issuing the necessary permits to operate Mexican gambling and lottery concessions, working in collaboration with individual state governments.