Fountain: OECD October 2021
An additional measure is the elimination of taxes on digital services, already provided for in some nations. Since June 1, 2020, Mexico introduced a scheme that obliges foreign companies that provide digital services through applications to pay value added tax (VAT). On March 13, the Tax Administration Service (SAT) published the list with the names of the 182 companies residing abroad that are registered as providers of this type of service.
In October 2021, the more than 136 countries, including Mexico , signed the “Declaration on the two-pillar approach to address the fiscal challenges derived from the digitization of the economy with a Detailed Action Plan”. Derived from this commitment, since 2022 they have been working on the drafting of a multilateral agreement. In parallel, they agreed to review and reform their laws to adapt them to the global minimum tax of 15%.
The 27 countries that make up the European Union set December 2023 for the entry into force of both pillars. For its part, the United States of America created two new taxes aimed at multinational companies, known as GILTI (global intangible low-tax income) and the transition tax.
Tax challenges and repercussions in Mexico
The challenges that Mexico faces are not alien to other governments that, voluntarily or due to international pressure, have gradually adopted the aforementioned commitments. According to the OECD, governments of developing countries may continue to offer incentives that attract foreign direct investment.
However, the OECD initiative is a stone thrown into the water, since to date there is no certainty of the scope of the waves that occur, especially in Mexico from 2024. It is a novel concept of global taxation , comparable, to a certain extent, to the bilateral agreements to avoid double taxation that were negotiated decades ago, which are still in force today.
In the case of Mexico, the Ministry of Finance and Public Credit (SHCP) will have to evaluate the impacts that this system will have on foreign companies that are transferring their operations to our country —nearshoring—. An additional aspect to analyze is whether, in accordance with the new OECD model that requires the elimination of contributions to digital services, the VAT that is currently charged on digital platforms should be eliminated. The adoption of the global minimum tax would lead to the elimination of VAT, which would eventually have an unfavorable impact on federal revenue.