Mexico tax on Netflix, Spotify and rivals could raise US$185 million: senator

Mexico tax on Netflix, Spotify and rivals could raise US$185 million: senator

A Mexican sales tax on foreign digital businesses providing audio or visual services could generate tax revenue of about 3.6 billion pesos (US$185 million) a year, a senior lawmaker in Mexico's ruling party said on Tuesday.

Computer games fair Gamescom in Cologne
Gamers and visitors take a rest at the booth of Netflix during Europe's leading digital games fair Gamescom, which showcases the latest trends of the computer gaming scene in Cologne, Germany, August 21, 2019. REUTERS/Wolfgang Rattay/Files

MEXICO CITY: A Mexican sales tax on foreign digital businesses providing audio or visual services could generate tax revenue of about 3.6 billion pesos (US$185 million) a year, a senior lawmaker in Mexico's ruling party said on Tuesday.

The finance ministry said Monday it is in talks to levy the charge on foreign online businesses, and the National Regeneration Movement (MORENA) of President Andres Manuel Lopez Obrador has sent a bill to Congress to legislate for the tax.

"If we approve the initiative, the Mexican state could obtain around 3.6 billion pesos a year," Ricardo Monreal, Senate leader of MORENA, told a news conference.

"I'm not talking about Uber, I'm not talking about Airbnb," Monreal added. "I'm only talking about the audiovisuals. Essentially, Netflix, Apple, Spotify ... Amazon Prime and another, there are four or five."

Mexico has pursued new sources of revenue to help plug an income gap after changes in the way national oil company Petroleos Mexicanos (Pemex) contributes to state coffers.

Late last year, Spotify said Mexico City had more users of its service than any other city.

Mexico's overall tax take is the lowest in the 36-nation Organisation for Economic Co-operation and Development (OECD). In 2017, it stood at 16.2per cent as a proportion of gross domestic product (GDP), less than half the OECD average.

(US$1 = 19.4885 Mexican pesos)

(Reporting by Dave Graham; Editing by Stephen Coates)

Source: Reuters

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