Tax Witholding begins on Airbnb

Hospitality platform Airbnb confirmed this week that it has begun collecting a 16% value-added tax (VAT) on accommodations in Mexico and that it expects that full compliance with Mexico’s new digital tax rules will be complete by October 1.

While other Hospitality platforms such as Booking.com and VRBO have been complying with the new law for a number of months, implementation was delayed on Airbnb due to an injunction files be the company to impede the law However, this injunction was unsuccessful and Airbnb now says it will comply with the new Mexican rules -including the withholding of some income tax from hosts- is being normalized.

“These resources have been developed to make it easier for hosts to comply with their tax obligations and so they can focus on what they do best: offer magical experiences and stays”, said Ángel Terral, Airbnb country manager for Mexico, Central America and the Caribbean.

In place since June, Mexico expects that the new Digital Platform Tax law will boost tax collection by the equivalent of US $4.7 billion once implementation has stabilized. Applying to vacation rental platforms such as Airbnb, the law is larger and has implications for tax collection on a large number of sharing platforms such as Uber and Rappi.

October 1 will be the first day of implementation on Airbnb. If you are an Airbnb host, watch out for email communication that should be coming in the next few days and will detail how the new law is being implemented on the platform.