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Mexico's VAT for U.S. Companies: Meeting Compliance Obligations and New Taxation of Digital Services

Obtaining Credits and Refunds, Determining VAT Withholding

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, June 23, 2020

Recorded event now available

This course will position U.S. corporate tax professionals to more effectively comply with VAT reporting, withholding, and remittance requirements in Mexico when their companies either purchase goods there, sell to Mexican residents, or provide digital or other services in the country.

Description

Tax professionals at U.S. companies with operations in Mexico or buy its goods and services must acquire a fundamental understanding of how the country's value-added tax works. The 16% tax applies to virtually every physical or online transaction.

Apart from transactions subject to a 0% rate (e.g., sales of medicine, most food, exports) and other transactions classified as exempt (e.g., sales of books, residential construction, public transport of passengers), U.S. tax specialists must grasp how to obtain deductions and credits to offset the VAT.

As of June 2020, Mexico added taxation of digital services to its list of items subject to VAT. Digital services include services provided over the internet and involve downloading images and video, online learning and clubs, and third-party mediation services. This tax applies regardless of whether a business meets the criteria for having a permanent establishment.

Transactions not properly accounted for (including late registration, math errors, and underpayments) are subject to penalties and surcharges. Tax professionals must stay current on the regime for withholding tax on sales to Mexican residents, use cash basis rather than accrual accounting, and know when and how to apply for cashless treatment and credits for certain transactions.

Listen as our panel of experienced transactional tax consultants reviews the legal and practical requirements of Mexico's VAT.

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Outline

  1. Fundamentals of VAT in Mexico
  2. Processes for obtaining deductions, refunds, and credits
  3. VAT tax and digital services
  4. Practical application of VAT withholding and cash accounting regimes

Benefits

The panel will cover these and other key topics:

  • Mexican VAT rates and tax base
  • Processes for obtaining deductions, refunds, and credits
  • New VAT on digital services
  • VAT withholding on sales by foreign residents
  • Cash basis accounting for these transactions

Faculty

Carbajo, Luis
Luis Carbajo-Martinez
Partner
Baker & McKenzie Abogados

Mr. Carbajo-Martinez has extensive experience in international tax planning, cross-border transaction, VAT and other...  |  Read More

Sneckenberger, Scott
Scott Sneckenberger
Partner
Plante Moran

Mr. Sneckenberger is attached to the firm's Global Services Group and leads the firm's Mexican Consulting...  |  Read More

Zavala, Juan Carlos Valles
Juan Carlos Valles Zavala
Partner
Baker & McKenzie Abogados

Mr. Zavala works on VAT, flat tax, international tax planning, permanent establishment and cross-border transaction...  |  Read More