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Bloomberg
After months of setbacks, Mexico is now on the cusp of rolling out an automatic tax payment system that forms a key part of its effort to crack down on evasion. And the government scored a marquee name — Uber Technologies Inc — to be its first participant, according to a person familiar with the negotiations.
For Mexico, it’s a big get. The country has been looking for ways to boost tax collection that’s the worst among members of the Organisation for Economic Cooperation and Development, a result of an economy that remains largely info- rmal. Uber is a key ally — it do-minates more than 80 percent of the market in Mexico, according to Dalia Research, and it also likely has many drivers and restaurants who don’t properly report or pay income tax. For Uber, the once-combative tech giant, it’s a test to a new strategy of offering more gestures of
cooperation to governments.
The pilot program will be geared towards ride-hailing and food delivery services, both of which Uber provides, and will allow it to withhold taxes from users who gain income from it, the person said, asking not to be named because the information isn’t public yet. It’s set to launch next week after a year of discussions, with Uber expected to officially join in early 2019. The program doesn’t create a new tax, the person said.
The tech firm will withhold an 8 percent value-added tax plus an income tax of up to 9 percent that will vary depending on the number of rides drivers complete each month, according to documents seen by Bloomberg News.
The Finance Ministry hopes to turn it into law after a yet-to-be-defined trial period, according to the person, meaning the final say would come from the next administration — incoming President Andres Manuel Lopez Obrador takes office December 1. While the new leader has spooked investors with referendums to scrap the construction of a $13 billion airport in Mexico City as well as public consultations on ten other announced projects, from refineries to a train meant to cross five southeastern states, the taxation program will likely be kept.