Tax Digitalization in Mexico: Success Factors and Pathways Forward

Mexico has been among the forerunners in tax digitalization, starting in the 1980s when it piloted digital Point of Sale (PoS) registration and invoicing.

Today, Mexico has one of the most advanced digital tax administration systems among the world’s emerging economies. Over several decades, Mexico’s impressive tax digitalization journey has been driven forward by the Tax Administration Service (Servicio de Administración Tributaria, or SAT), the national entity responsible for collecting federal taxes.

Corporate income tax (CIT) and personal income tax (PIT), and value added tax (VAT) represent around 80% of the total revenue collected nationally each year in Mexico.Through sound strategic decision making, far-sighted reform with robust implementation, and ongoing investment, Mexico has delivered impressive results. Key achievements are set out immediately below, along with key lessons from Mexico’s tax digitalization journey that could inform other countries’ reform efforts.

SAT’s digitizing tax payments and related processes can raise an additional USD 300 billion in government revenues annually in emerging and developing countries. This is equivalent to almost one-third of the USD 1 trillion funding gap, which has put the Sustainable Development Goals at severe risk.