Mexico Expands Digital Platform Tax Withholding Rules Under 2026 Tax Reform Package

• Mexico’s 2025 tax reform tightens VAT, excise, income tax, and federal tax code rules, effective January 1, 2026.
• Digital platforms must withhold VAT and income tax on B2B transactions, with rates depending on whether the seller provides a Mexican tax ID (RFC).
• 100% VAT withholding applies to sales by nonresidents with goods in Mexico and to payments deposited in foreign bank accounts if the income is Mexican-sourced.
• Platforms must issue e-invoices for withholdings and report information on all sellers, including those with offshore settlements, even if they do not process payments.
• The income tax withholding rate for Mexican individuals using digital platforms increases from 1% to 2.5%.

Source: kpmg.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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