Mexico’s Tax Administration Service (SAT) has announced that, beginning January 1, 2025, all foreign businesses selling products through e-commerce platforms will be subject to a 16% value-added tax (VAT). This move primarily targets major foreign e-commerce platforms like Shein, Temu, and Amazon, and is expected to generate 15 billion pesos in tax revenue for the Mexican government.
The new tax policy is part of the 2025 Income Tax Law and aims to strengthen tax enforcement, ensuring that large e-commerce platforms comply with local tax regulations. A Mexican lower house official expressed support for this legislative reform, emphasizing that even if these platforms do not sell products through Mexican companies, they will still be required to pay VAT as long as the products are stored within Mexico.
Previously, platforms like Shein benefited from a tax exemption for purchases under $50, meaning no VAT was applied to such transactions. However, this exemption will no longer be valid under the new regulations. According to Mexico’s 2025 economic plan, the government expects to collect around 8 trillion pesos in total revenue, with tax income accounting for a major portion. Tax revenues are projected to grow by 2.6% compared to the previous year.
Foreign e-commerce platforms and businesses will need to register for tax purposes, submit tax declarations, and make payments in compliance with the SAT’s requirements. This will likely require companies to have specialized knowledge and management capabilities related to tax regulations, or they may need to seek professional tax advisory services to ensure compliance and avoid penalties.
In theory, e-commerce platforms may pass some or all of the increased tax costs onto consumers, potentially raising product prices. However, some analysts suggest that market competition may limit companies’ ability to increase prices significantly, meaning that consumers might only see a modest rise in prices.
