After months of setbacks, Mexico is about to roll out a trial automatic tax payment system, with Uber to be the first participant in the scheme.
Mexico has the worst rate of tax collection of all Organization for Economic Cooperation and Development countries, but the plan is a key part of its efforts to crack down on evasion. The pilot programme will initially be geared toward ride-hailing and food delivery services, both of which Uber provides, with the aim of allowing participants to withhold taxes from their workers, a source told Bloomberg.
The service is set to launch this week following a year of discussions, and Uber is expected to officially join the scheme in early 2019. The ride-hailing service provider will withhold 8% in value-added tax as well as income tax of up to 9%, although the figure will vary depending on the number of jobs drivers complete each month.
The Mexican Finance Ministry hopes to make the system mandatory after an as yet-to-be-defined trial period, which means the next administration will have the final say. Incoming President Andres Manuel Lopez Obrador is due to take office in December.
But the current Government is betting that the automatic withholding of taxes will be greeted positively by drivers as, rather than having to file their taxes monthly, they would only need to do so once a year.
Uber said in a statement: “We reiterate our willingness to collaborate with government institutions. We will work together with the Mexican tax authorities to boost the shared economy and grow self-employment opportunities in the country.”
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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After months of setbacks, Mexico is about to roll out a trial automatic tax payment system, with Uber to be the first participant in the scheme.
Mexico has the worst rate of tax collection of all Organization for Economic Cooperation and Development countries, but the plan is a key part of its efforts to crack down on evasion. The pilot programme will initially be geared toward ride-hailing and food delivery services, both of which Uber provides, with the aim of allowing participants to withhold taxes from their workers, a source told Bloomberg.
The service is set to launch this week following a year of discussions, and Uber is expected to officially join the scheme in early 2019. The ride-hailing service provider will withhold 8% in value-added tax as well as income tax of up to 9%, although the figure will vary depending on the number of jobs drivers complete each month.
The Mexican Finance Ministry hopes to make the system mandatory after an as yet-to-be-defined trial period, which means the next administration will have the final say. Incoming President Andres Manuel Lopez Obrador is due to take office in December.
But the current Government is betting that the automatic withholding of taxes will be greeted positively by drivers as, rather than having to file their taxes monthly, they would only need to do so once a year.
Uber said in a statement: “We reiterate our willingness to collaborate with government institutions. We will work together with the Mexican tax authorities to boost the shared economy and grow self-employment opportunities in the country.”
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER ARTICLES THAT MAY INTEREST YOU
Minding your manners in Latin America
A brief guide to labour laws in Mexico
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