Latin America’s digital transformation is reshaping the way business is conducted and how governments approach taxation. As digital platforms, streaming services, and cross-border e-commerce become increasingly prevalent, tax authorities across the region are responding with new frameworks and enforcement strategies. The region’s approach to digital taxation is dynamic and evolving, moving toward greater inclusion of digital activities in the tax net, increased compliance demands, and more robust enforcement. For businesses operating in the digital space, staying agile, monitoring regulatory changes, and investing in compliance will be essential to navigate this complex and rapidly changing environment.
While each country’s approach varies, several clear regional trends are emerging. Countries throughout the region are broadening their tax bases to include digital services, both from local and foreign providers. This expansion means that value-added taxes (VAT), gross receipts taxes (GRT) and withholding taxes (WHT) are being applied to digital transactions, regardless of where the service provider is located. The goal is to create a level playing field between domestic and international businesses and to secure much-needed tax revenues in a rapidly digitizing economy.
A common trend is the introduction of new compliance and reporting obligations for digital platforms, payment processors, and non-resident service providers. Authorities are increasingly requiring foreign companies to register locally, collect and remit VAT, and provide detailed transaction reports. Simplified regimes are being implemented to facilitate compliance, but the administrative burden is growing for digital businesses operating across borders.
Tax administrations are also stepping up audits and enforcement in the digital sector. This includes proactive outreach to foreign companies, the use of “white and black lists” to encourage compliance, and, in some cases, aggressive audit tactics and short-notice visits. The focus is shifting from merely establishing rules to ensuring they are followed, with penalties for non-compliance becoming more common and, in some cases, creating criminal consequences for individuals working for these service providers.
Some countries are aligning their digital tax rules with international frameworks, such as the Organisation for Economic Co-operation and Development’s guidelines for the taxation of the digital economy. This includes adopting model rules for reporting, due diligence, and defining the scope of taxable digital activities. Such alignment aims to reduce uncertainty for multinational businesses and foster greater consistency across the region. Despite progress, the region faces ongoing debates about the scope of digital taxation, the definition of digital services, and the balance between encouraging innovation and ensuring fair taxation. Legislative proposals for digital service taxes are under discussion in some countries, while others are refining their VAT and WHT regimes to address new business models and technologies.
In practice, Argentina imposes a 31.5% WHT on cross-border payments for digital services, with a reduced rate of 17.5% for certain media transmissions, and requires local payors to handle reporting and payment. Brazil applies a standard 15% withholding tax for digital services (rising to 25% for payments to low-tax jurisdictions) and is preparing for a major VAT reform that will transform the system between 2026 and 2033. The reform introduces a broad tax base covering intangibles and rights, destination-based taxation, and mandatory registration for non-resident platforms, which will significantly increase compliance obligations for marketplaces and digital service providers. Regulations are still pending, but the burden on foreign platforms is expected to be substantial.
Chile generally applies a 19% VAT to digital services provided by non-residents, unless a WHT applies, and recent reforms have introduced new compliance obligations for digital platforms, including mandatory registration and reporting. Chile’s Congress is reviewing a bill to legalize and regulate online betting, emphasizing consumer protection and transparency, and imposing a 20% tax on operators’ gross income plus a 2% levy for the National Sports Institute.
In addition to applying VAT on certain digital services, Colombia also has significant economic presence rules and implemented a 10% withholding tax (or 3% on gross income) for a broad range of digital services and now requires platform operators to comply with OECD-aligned reporting standards.
Mexico charges a 16% VAT on digital services provided by non-residents and focuses on strict compliance, requiring timely filing and updated digital signatures. Mexican authorities have also increased audit activity in this area, and discussions have included controversial enforcement proposals such as a “kill switch” mechanism that could block non-compliant platforms from operating. Precedents exist for WHT on technical assistance and advertising payments, as well as VAT offset rules, making compliance readiness essential for foreign platforms.
In Peru, a 30% withholding tax applies to B2B digital services, while VAT is imposed on B2C transactions, and foreign platforms must register for a Peruvian tax ID. Argentina charges a 21% VAT on digital services provided by non-residents and GRT at rates which vary depending on the Argentine jurisdictions in which the recipient of the services is located.
These examples show that, while the details differ, countries across Latin America are seeking to ensure effective taxation and compliance in the rapidly evolving digital economy.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Alberto Maturana is a Tax Partner at Baker McKenzie Chile, Ciro Meza is a Tax Partner at Baker McKenzie Colombia, and Martín Barreiro is a Tax Partner at Baker McKenzie Argentina.
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