Mexico City Implements New 2% Tax on Food Delivery Apps for Infrastructure Improvements
Mexico City, December 15, 2021 – The Congress of Mexico City has approved a new initiative that will see a 2% tax levied on the earnings of food delivery applications operating within the capital. This measure, affecting companies such as Uber Eats and Rappi, is slated to come into effect at the beginning of 2022.
Funds Earmarked for Urban Infrastructure
The revenue generated from this new tax will be allocated to the Secretariat of Administration and Finance (SAF). The SAF will be responsible for managing these funds, with the explicit intention of directing them towards various urban infrastructure repairs and remodeling projects across the city.
The newly approved modification to the Fiscal Code of Mexico City stipulates that this tax is non-transferable. This means that the 2% charge must be absorbed by the food delivery companies and should not result in an additional cost or surcharge for the end-user or customer.
Part of Broader Tax Changes
This new tax joins a series of other controversial fiscal measures recently introduced in Mexico City. These include charges on other digital platforms and fines for residents of the capital who register their vehicle license plates in other states of the Republic. These changes reflect a broader effort by the local government to diversify revenue streams and address various urban challenges.
The decision to implement this tax comes after extensive deliberations within the Mexico City Congress, highlighting the growing trend of local governments seeking to regulate and benefit from the burgeoning gig economy. Proponents of the tax argue that it is a necessary step to ensure that large digital platforms contribute to the public services and infrastructure they utilize.
While the new tax aims to bolster city finances for critical infrastructure projects, its long-term impact on the food delivery industry and consumer behavior in Mexico City remains to be seen. The non-transferable nature of the tax is intended to protect consumers from price increases, but companies may need to adjust their operational models to accommodate the new fiscal obligation.
This development underscores the ongoing discussion about how digital services integrate into existing urban economies and how governments can effectively manage and tax these rapidly evolving sectors.
