Introduction
The proposed amendments to the Income Tax Law and reforms to the Federal Fiscal Code (CFF) aim to establish a 2.5% withholding tax on Income Tax (ISR) and introduce Article 30-B to monitor digital platforms. These measures seek to close tax revenue gaps and ensure fair taxation in an increasingly digital environment where transnational companies generate income in Mexico without physical presence. The challenge lies in adapting fiscal norms to the digital economy while following international best practices, ensuring efficient administration, preventing tax evasion, and safeguarding users’ and platforms’ privacy rights.
Current Fiscal Framework in Mexico
Mexico’s fiscal framework already incorporates the digital economy through specific obligations for platforms and users. Foreign platforms providing services to Mexican consumers must collect and remit a 16% Value Added Tax (VAT) to the Mexican tax administration (SAT), while those intermediating services like transportation or accommodation retain 50% of the VAT from individual users. For ISR, they also withhold taxes at varying rates: 2.1% for transportation and 4% for accommodation, which can be provisional or definitive based on the taxpayer’s income level.
Fiscal Implications of the Platform Economy
The platform economy has significant tax implications. According to the Tax Foundation, digitalization creates a gap between where value is consumed and where benefits are declared. In 2020, nearly 40% of the value created in information industries originated in North America, while another 40% of internet users concentrated in Asia. Consequently, many platforms can operate in Mexico without proportionally contributing to the tax system, affecting fairness towards local businesses.
International Best Practices
International experience suggests that best practices for taxing digital platforms combine consumption measures (like VAT on digital services) with gross receipts measures (such as Digital Services Taxes, DST) and reporting rules for platform operators. The Organisation for Economic Co-operation and Development (OECD) published model guidelines for platform operators’ reporting to tax authorities, even without a permanent establishment. The OECD also issued a report on the role of digital platforms in collecting Value Added Tax (VAT) on digital sales, showing that platforms can function as tax collection agents or registered subjects for withholding purposes, significantly improving revenue collection.
Tax Rates on Digital Income
Countries like France, Italy, Turkey, and the United Kingdom already impose taxes on gross income derived from digital activities—such as intermediation or online advertising—with average rates between 2% and 3%, according to the OECD thresholds. For example, France applies a 3% tax on digital income for companies with over €750 million in global sales and at least €25 million in France. The international trend points towards combining tax measures and technological oversight as part of a comprehensive policy against evasion.
Strengthening Administration and Compliance
The CFF reform aims to bolster administration, compliance, and prevention of evasion in digital platforms. Mexico needs tools to identify operations and income flows in transborder platforms, aligning with the OECD’s reporting rules that require operators to register and report income from their vendors to tax authorities. This requires interoperable technology, international cooperation, and effective sanctions for non-compliance, along with retention or self-assessment mechanisms applicable to non-resident service providers.
Privacy and Data Protection Risks
The proposed obligation in the CFF for platforms to provide real-time, unlimited information to the SAT and the fiscal authority’s power to enter technology agreements with the Digital Transformation and Telecommunications Agency (ATDT) for “technology management and data analysis” open a front of risk regarding privacy and personal data protection. If approved, tax authorities would have extensive access to user and service provider data—income, usage patterns, commercial relationships, addresses—multiplying the risk of violating due process, privacy, security of law, and non-arbitrary intervention rights as per Article 16 of Mexico’s Constitution governing harassing acts and personal data protection.
International Comparisons
Unlike other international models where data transmission occurs through periodic reports with cybersecurity audits, the CFF’s Article 30-B authorizes direct access to platform systems without technical mediations or administrative and judicial controls. No country with comparable data protection standards to Mexico has implemented such a scheme.
Excessive Sanctions and Collateral Damages
The proposed sanction—temporarily blocking digital services—is excessive and has unwanted side effects. It disrupts essential service operations and harms thousands of compliant users and businesses relying on these platforms. Instead of promoting compliance, such measures may create uncertainty, economic disruption, and distrust in tax authorities.
OECD Recommendations
The OECD warns that indiscriminate data use in tax administration can lead to a “large database” enabling detailed tracking of individuals’ economic lives, raising legitimate fears of a “Big Brother” tax authority. The second risk—commonly called “meta-taxation”—arises from sophisticated data analysis and algorithms that can cross-reference platform information with other governmental or private databases, profiling digital service providers or users based on tax risk criteria. This profiling could affect equal treatment under the law and the presumption of innocence if it becomes the basis for automated audits or selective controls without transparent criteria.
The OECD recommends data governance frameworks, anonymization, strict security protocols, and transparency in AI use for tax matters to prevent fiscal efficiency from eroding constitutional guarantees. Real-time platform information access should be subject to judicial controls and autonomous specialized data protection bodies’ oversight. The law should also provide for independent technological audits, accountability mechanisms, and public reports on algorithm or data analysis tool use.
Conclusion
The new Article 30-B of the Federal Fiscal Code reflects Mexico’s effort to adapt its tax system to the digital economy. However, its current design risks overstepping boundaries. Real-time taxation can be a valuable tool with clear limits, but in its present form, it introduces an unprecedented level of state access to private information and envisions disproportionate sanctions—like temporarily blocking digital services—that negatively impact millions of compliant users and businesses.
*The author is the Director of Inteligencia Más and a master’s degree holder in Public Administration and Policy from the Universidad Panamericana.
