Business

Restaurants in Mexico are leaving delivery apps after new digital taxes, says Milenio

VAT and ISR were already applied to local companies, but now foreign service providers are also being charged, as well as those who sell through digital platforms

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  • The tax withholds up to 5.4% depending on the total amount of monthly income and up to 16% in the case of VAT;
  • The new tax caused a loss of nearly 60% of profits on orders for restaurants.

New taxes on digital platforms in Mexico are making restaurants decide to turn off delivery apps as a sales option. According to a report by the Milenio, restaurants in the country are choosing to leave the platforms due to the loss of nearly 60% of their profits on orders.

READ ALSO: Mexico will start charging two taxes on foreign digital services from June

Since June 1st, a Mexican Tax Reform stipulated the payment of taxes for those who use digital platforms as a means of work. It means that the tax withholds up to 5.4% depending on the total amount of monthly income and up to 16% in the case of VAT (Value Added Tax). Foreign companies that provide digital services to users in Mexico through applications are now also required to pay VAT.

READ ALSO: 8 out of 10 Latin Americans have taken steps to preserve personal finances in the pandemic

According to the media outlet, Mexican restaurants are trying to find new ways to reach customers, including the implementation of discounts or even looking for new apps with lower commission rates.