How Does Mexican New VAT Policy Impact on E-commerce Sellers

Time: Dec 25,2024 Author: SFC Source: www.sendfromchina.com

The Mexican Tax Administration Service (SAT) has unveiled a new regulation requiring all foreign businesses selling products via e-commerce platforms to pay a 16% Value-Added Tax (VAT) beginning January 1, 2025. This policy aims to enhance tax revenue and strengthen the regulation of foreign e-commerce activities in Mexico.

Key Highlights of the VAT Policy

The new VAT policy applies to cross-border sellers whose goods are stored within Mexico, irrespective of whether they operate as local Mexican companies. These sellers must comply with the 16% VAT requirement.
Major Platforms and Their Compliance Rules

1. Amazon

- Sellers using Fulfillment by Amazon (FBA) must upload a valid RFC (Registro Federal de Contribuyentes) tax number to continue utilizing the service.
- Sellers without an RFC number will face a 20% withholding on income tax in addition to the 16% VAT withholding.
- Sellers who provide an RFC number will only have the 16% VAT withheld by the platform.

2. Mercado Libre

- Starting January 1, 2025, Mercado Libre will begin withholding VAT on payments transferred to international accounts.
- Sellers can avoid this by setting up a local Mexican bank account through the "Sales Preferences > Payment Methods" section in their account settings.

3. TEMU

- All sellers targeting the Mexican market must provide a valid RFC tax number.
- Sellers using the TEMU Mexico platform, except those dealing with overseas warehouse stock, need to be RFC-registered.
- TEMU will verify the tax registration status of sellers based on inventory and shipping arrangements. Non-compliance will result in inventory deactivation and shipping suspension. Monthly RFC status re-verifications will be conducted by the platform.

4. SHEIN

- Sellers without an RFC tax number will have taxes withheld by the platform.
- Sellers who provide an RFC tax number will directly handle their tax payments to SAT during SHEIN filing process, with no withholding by the platform.

5. AliExpress

- Starting in 2025, orders shipped from Mexican warehouses and paid into non-Mexican bank accounts will be subject to a 16% VAT withholding by the platform.
- AliExpress will provide sellers with tax withholding certificates.
- Sellers are advised to prepare local bank accounts and input their details in AliExpress’ local bank collection system. Once the platform upgrades its local remittance service, sellers will handle their VAT payments directly, without platform intervention.

What Should Sellers Do for the Mexican New VAT Policy

E-commerce sellers must closely monitor platform announcements to ensure their operations remain unaffected. Key preparations include:

- Registering for an RFC tax number with the Mexican Tax Authority.
- Setting up local bank accounts for seamless payments.
- Staying informed about the specific compliance guidelines issued by individual platforms.

Tips From SFC Experts

SFC is a professional fulfillment brand in China with over 17 years of international shipping experience. Here are some small tips from SFC team for the new Mexican VAT policy:

1. Tax exemption ends January 1: While this change is almost certain, there’s no formal documentation yet.
2. RFC/CURP required starting January 1: Providing this information will be mandatory. Shipments without it won’t clear customs and will be rejected.
3. SFC Dedicated Line for Sensitive Goods Are tax-inclusive: These lines don’t require a tax ID, but delivery times are slower, and customs clearance isn’t guaranteed.
4. General tax ID available locally: A universal tax ID option exists for use within Mexico.
5. Amazon updates by late February: Amazon is expected to require mandatory tax ID submissions by the end of February 2025.
6. 35% clothing tax increase applies to general trade: The higher tax rate is for general trade only and doesn’t affect small parcels.
7. U.S.-Mexico transshipment plan not viable: Due to country-of-origin issues, the option isn’t applicable.

Conclusion

The new VAT policy represents a pivotal change in Mexico’s approach to regulating foreign e-commerce platforms, aligning with a global trend of stricter tax enforcement in the digital economy. By focusing on platforms like Shein, Temu, and Amazon, Mexico seeks to level the playing field for local businesses while boosting government revenues. However, the new VAT policy could result in higher consumer prices and force foreign sellers to adapt their logistics strategies. The long-term impact will hinge on Mexico’s ability to balance robust tax compliance with maintaining a competitive e-commerce ecosystem that attracts international players.