As of June 1, 2020, several digital services provided by foreign-based suppliers are subject to VAT (16%) in Mexico.

Mexican authorities indicated that in 2021, 8,838 million pesos were collected for this concept.

What are the digital services subject to VAT? They are those provided in Mexico for which a consideration is charged and are provided through applications or content in digital format through the internet or other network. They may not even require human intervention; that is, they may be automated.

Digital services subject to VAT are:

• Ground transportation of passengers.
• Delivery of prepared food.
• Delivery of goods (other than prepared food).
• Lodging.
• Trade of goods.
• Other type of services.
• Downloading or accessing digital content.
• Online clubs and dating sites.
• Distance learning, tests or exercises.

According to the Study on Online Sales in Mexico published in 2021 by the Mexican Association of Online Sales (AMVO), the value of electronic transactions grew 81% in 2020, generating 316,000 million pesos.

Digital services

However, despite this increase, a World Trade Organization (WTO) report indicates that this amount only represented 9% of the total value of retail sales.

In 2021 AMVO also published a Study on Online Sales in SMEs, which analyzed the way of doing business and the integration of e-commerce in the management and production models of 450 SMEs.

The results indicated that 58% of the SMEs interviewed were using e-commerce and that it had become essential to increase competitiveness, promote digitalization and increase the number of customers.

However, SMEs highlighted that when using e-commerce there were still challenges related to logistics, such as transportation costs and delivery times.

During the period 2013-2017, the share of e-commerce in Mexico’s GDP increased from 3 to 4.6 percent.

Since 2017 the increase has continued, accelerating in 2020 in the wake of the pandemic that induced changes in business models, production and demand.

In 2021, Mexico had 123.9 million cell phone lines; penetration has increased since 2017 approaching 100 percent

In 2020, the pandemic sparked an increase in demand for fixed broadband for remote activities; penetration reached 64 percent in 2020, and continued to increase in 2021.