Our Commitment to you, has always been and always be to ensure that we as your property partners are keeping you as up to date as possible when it comes to changes to protocols, procedures and Mexican regulations and laws.
 
In the email below, you will find information about and clarification about hospitality tax and how it specifically pertains to “lodging in real estate”.  Plus, instructions about information we must provide for each booking to SAT (Mexican Federal Tax authority) for each reservation.
 
Over the last couple of years, the changes to, updates and processes for ISR (Income tax) and IVA (Sales Tax) retentions have been everchanging. We have done our best to navigate these to best advantage of our owners. 
 
Many have tried to circumvent the tax regime and retentions by claiming that they are not a “digital platform”.  However, as you will see in the quoted laws below, basically any company that offers hosting services, intermediary, promoter or operates in the capacity of a manager defines a “digital platform”.
 
For decades, the Mexican Federal and State government turned a blind eye to the enforcement of taxes on income made in Mexico and now, seemingly they are insuring everyone follows the rule. 
 
We, like you find these changed challenging as the work process that a team of 1-2 could handle has now grown to a team of 4.  The process of sending retention information, documentation and the payments thereof are tedious and all inputted manually into the SAT system. With the every changing process, we now have to provide even more information and details about each and every booking. Now with the addition of the State hospitality tax it is yet another process and system.
 

A few months ago, we were made aware that the hospitality tax was or would become applicable to all bookings / reservations.  When we made modifications to website, booking system and back-end system for the ISR retentions and IVA retentions we adapted the system at that time to charge the hospitality tax to the guests. Before we initiated this process and implemented it fully, we wanted to do our due diligence and ensure this was applicable to short term vacation rentals. This took time and many meetings with tax specialists, accountants and to complete investigation. Upon further clarification and scrutiny, it was determined we must collect this tax. For clarity, this tax is NOT a tax the owner pays, but the guest using the unit.  However, it is the responsibility of the owner to charge it.

FACTS ABOUT THE HOSPITALITY TAX

- 3% of booking total
- Paid by the guest
- Requirement by Short Term Vacation Rental owners / properties
- Retained on every booking
- Paid every 60 days
- Paid to the State Tax office SEPAF (Secretaria de Planeacion, Administracion y Finanzas del Estado)

UPDATES TO ISR & IVA TAX RETENTIONS

Although there have been no changes to the tax amounts or parameters in which or for which booking we retain these taxes, the process of submission and the information needed for the submission has been changed.

We are now required to submit the following information for all retentions:

Information and Links of interest regarding tax laws
 
State Jalisco Hospitality / Lodging Tax Law
State Jalisco Definition of Digital Platform
Federal Tax Law as indicated by Servicio de Administracion Tributaria (SAT)

https://congresoweb.congresojal.gob.mx/BibliotecaVirtual/busquedasleyes/Listado.cfm#Leyes
 
https://www.sat.gob.mx/normatividad/68264/leyes
 

Exerts (translated from Spanish to English for readers purpose)
 
State Article 47. This tax is subject to income from the provision of lodging services, in buildings governed by the modality of timeshare use, hotels, motels, camps and trailer parks, in real estate located in the state of Jalisco.
 
Likewise, for the purposes of this tax, the provision of accommodation services is understood to be the granting of accommodation in exchange for a consideration, whatever the name it may have, including accommodation services offered through digital platforms, regardless of its temporality.
 
State Article 49. II. Transfer the tax to the people to whom the lodging service is provided and pay it in the authorized offices within the term indicated in this chapter
 
State Article 49 bis. Digital platform is understood as the application of hosting services that the natural or legal person administering the computer program, operates in its capacity as manager, intermediary, promoter, facilitator or any other analogous activity, to allow users to contract hosting services. lodging in real estate with third parties.
 
State Article 52. The entire tax will be made by the lodging service provider no later than the 15th day after each two-month period of the calendar year at the Tax Collection Offices of the Ministry of Public Finance or before authorized credit institutions.
 
Federal Article 113-A. Individual taxpayers with business activities that sell goods or provide services through the Internet, by means of technological platforms, computer applications and similar that provide the services referred to in Section II of Article 18-B of the Value Added Tax Law, are obligated to pay the tax established in this Section, for the income generated through the mentioned media for the performance of the mentioned activities, including those payments received for any additional concept through the same…
… The tax referred to in the preceding paragraph shall be paid by means of withholding to be made by the individuals resident in Mexico or resident abroad with or without a permanent establishment in the country, as well as foreign entities or legal entities that provide, directly or indirectly, the use of the mentioned technological platforms, computer applications and similar.
 
II. In the case of the rendering of lodging services, the withholding shall be 4%.
 
Article 113-C. Legal entities resident in Mexico or resident abroad with or without a permanent establishment in the country, as well as the foreign entities or legal entities referred to in the second paragraph of Article 113-A of this Law, will have the following obligations:
 
I. In the case of residents abroad without a permanent establishment in the country and foreign entities or legal entities, they must comply with the obligations set forth in Sections I, VI and VII of Article 18-D and subsection d), Section II of Article 18-J of the Value Added Tax Law.
 
IV. Withhold and pay the corresponding income tax in accordance with the provisions of Article 113-A of this Law, by means of a tax return to be filed with the authorized offices no later than the 17th day of the month immediately following the month for which the withholding was made.
In the event that the taxpayers do not provide their Federal Taxpayers' Registry Code provided for in paragraph b) of section III of Article 18-J of the Value Added Tax Law, the corresponding tax must be withheld for the income referred to in Article 113-A of this Law, applying the rate of 20% on the referred income.