Tax on Airbnb would give equal conditions to hotels to compete in Mexico

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This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Regulate the collection of taxes for services provided through hosting platforms such as Airbnb and Booking, so that the tax charges can be comparable to those of traditional hotel services, could match the conditions of competition, says a report by the consultancy Salles Sainz Grant Thornton.

Pedro Zugarramurdi, a specialist in Salles, explained that up to now, there is inequity due to the tax burden which does not allow a more even competition.

"If there is a lack of equity in the sense that hotels are regulated entities, registered in the Treasury and that pay taxes, that they have employees, etc., and that a person does not have them who offers a service through those platforms. The way to match the floor a bit for both types of services is obviously to try to tax that type of accommodation in a way."

Few maintain an audit. He recalled that, so far, various entities such as Mexico City, Quintana Roo, Yucatan, Baja California and Sinaloa, supervise people who provide accommodation services through digital platforms with the Tax for the Provision of Lodging Services, which it is 3.0%.

It is a retention carried out by the platform and is an efficient measure, since you only have to monitor a company and not all those who provide the service, and in this way Airbnb is responsible for retaining and informing. However, he stressed that although this is an advance, there is still work to be done on federal withholding such as Income Tax (ISR) and Value Added Tax (VAT).

"Ideally, a part of those taxes could also be withheld from people so that they can pay a little more and contribute to VAT and ISR and match the field more."

An analysis carried out by the Faculty of Tourism of the Anáhuac University calculates that Airbnb could evade to the treasury up to four thousand 100 million pesos annually (US $ 213,596).

Zugarramurdi explained that, in order for Airbnb to make a withholding of ISR and VAT for the people who provide these services, there would have to be a legal modification.

It would have to be through this procedure, because until now the obligation is in the individual, with the people ". For what it said it would have to be until the next legislative period and, once it is approved, the obligations would come into force until 2020.

He added that hoteliers have the same tax burden as any moral person in the country. However, he acknowledged that Mexico is high.

The tax burden in Mexico is a bit high, especially for purposes of motivating investments by companies. A few years ago the ISR was 28% and today 30%. Instead of lowering we raise the collection. Maybe, compared to other countries, the ISR rate may be relatively a little high and it could be returned at a rate of 28%, which was the rate, and do it for everyone. "

He pointed out that as long as there is no solution to this problem and the degree of inequality between both services is growing, it could affect well-established hotel services. "If it is not resolved in the short and medium term, it can affect the hotel industry. To the extent that the authority is late, will have less revenue, "he added.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.