Mexico withholding 8% VAT on ride sharing and food delivery
- May 27, 2019 | Richard Asquith
Mexico has reached agreement on voluntary 8% VAT withholding with a number of major ride sharing and food delivery online platforms. The agreement includes Uber, Uber Eats, Bolt, Cabify, Rappi, SinDelantal and Cornershop. However, so far, Didi, the Chinese ride hailing company, has declined to join.
The measure requires participating platforms to withhold VAT and income tax elements of commissions paid to participating drivers. The income tax rate will range from 3% to 9%.
The new regime will come into force on 1 June 2019. It will not change drivers’ employment status, a key issue for Uber since Mexican law allows for retention of taxes without an employment relationship. The Mexican finance ministry said the program, which had been anticipated, “does not represent new or additional taxes, its objective is to simplify compliance with tax obligations.”