Background on the Issue
The Latin American Internet Association (ALAI), a prominent lobby for internet companies in Latin America, has voiced its opposition to a proposal by the Mexican government that would grant the Servicio de Administración Tributaria (SAT) permanent, real-time online access to digital platforms’ systems and records.
Government Proposal Details
The proposal, included in the 2026 Economic Package, aims to amend Article 30-B to the Federal Tax Code. This change would require digital service providers, as defined by Articles 1o.-A BIS and 18-B of the VAT Law, to allow tax authorities access in real-time and online to information related to their operations. The SAT would establish technical specifications via general rules and sign agreements with the Agency for Digital Transformation and Telecommunications (ATDT) for technology management or data analysis.
Failure to comply would result in temporary access blocking, according to the provisions of the VAT Law.
The government argues that this measure aims to enhance tax collection efficiency and ensure immediate information access regarding digital economy operations, which have grown significantly. The government believes electronic controls are necessary to ensure tax compliance.
ALAI’s Concerns
In response, ALAI described the proposal as “unconstitutional and disproportionate,” warning of privacy and data security risks. The association argued that the proposal lacks clear boundaries for accessing private databases and user information, potentially violating constitutional rights such as privacy and due process. Moreover, ALAI highlighted the risks to cybersecurity and user trust.
ALAI emphasized that there are no democratic precedents allowing direct, permanent, and real-time government access to private digital sector databases. The association also warned about the dissuasive effect on investment and freedom of expression if blocking powers are maintained.
Key Questions and Answers
- What is the proposal about? The Mexican government proposes amending the Federal Tax Code to grant SAT permanent, real-time online access to digital platforms’ systems and records.
- Who opposes the proposal? The Latin American Internet Association (ALAI), representing internet companies in Latin America, opposes the proposal.
- Why does ALAI oppose it? ALAI argues that the proposal is unconstitutional, disproportionate, and poses risks to privacy, data security, cybersecurity, and user trust. They also emphasize the lack of democratic precedents for such direct government access to private digital databases.
- What are the potential consequences of the proposal? ALAI warns that the proposal could have a dissuasive effect on investment and freedom of expression.
Contextualizing the Impact
The Latin American Internet Association (ALAI) plays a crucial role in representing the interests of digital platforms and internet service providers across Latin America. With a growing digital economy, ensuring efficient tax collection is essential for governments. However, ALAI’s concerns about privacy, data security, and constitutional rights cannot be overlooked.
The proposed legislation’s emphasis on transaction traceability aims to combat tax evasion and improve revenue collection. Still, ALAI’s focus on potential constitutional, technical, and security risks associated with persistent access to private systems is equally important.
ALAI calls for a technical dialogue and public consultation to find balanced solutions that protect rights without destabilizing the digital ecosystem. The industry, represented by ALAI, demands safeguards, clear limits, and consultation processes before any legislative changes that could affect fundamental rights and digital ecosystem stability.
