On December 26, 2013, the Mexican legislature established tax provisions under which foreign companies, hosting qualifying events in Mexico, could benefit from a 0% Value Added Tax on certain expenses. This legislation is done through a Decree in which a tax incentive is granted to undertakings providing hotel and hotel services related to foreign tourists entering the country to participate exclusively in conferences, conventions, exhibitions and fairs to be held in 100% country VAT payable for such services. Under this law, qualifying groups do not have to pay value added tax of 16% on the price of the room, however, the tax on hospitality 3% still applies to room revenue.
For qualifying groups, the 0% VAT law applies to:
• Guest rooms charges over main program dates and for up to two days pre and post. Guest room charges must be paid by the master account
• Audiovisual equipment and services used for the meeting or banquet event Photographers and or videographers used for the meeting or banquet event
• Telephone or internet connection used in the group’s meeting room or office (not applicable to guest rooms).
• Recorded or live music and decoration used for the meeting or banquet event.
• Food and beverage planned by the group contact which:
o Takes place in the hotel.Is a scheduled banquet event to which all attendees areinvited.
o Is charged to the group’s master account.
In basic terms, the summary of qualifying terms and conditions to qualify for the 0% VAT Law are as follows:
1. The event must qualify as a “Congress, Convention, Exposition, Trade Show or Fair.” Event definition should not refer to incentive travel or use similar verbiage. “Incentive travel” as a reward for job performance, appreciation or motivation, regardless of the program name, does
not qualify for 0% VAT.
Congress: Any professional reunion with the objective to have a discussion and professional, cultural, sports-related, religious, social, academic or government exchange on a topic of interest.
Convention: Any trade or business reunion whose objective is commercial business among the participants of the market, products, or brands.
Exposition: Commercial, or cultural event with gathers members of a business, professional or social sector, and is organized for the purpose of presenting products or services.
Fair: Exhibition of products or services that occur in a specific area with the objective to commercialize and promote businesses.
2. The Event Organizer / Meeting planner cannot be a resident of Mexico.
Upon check-in, each guest must provide the Meeting Planner/End user with:
1. A copy of the immigration form completed upon entry into Mexico. Purpose of the trip must mention: business.
2. A copy of the guest’ passport or birth certificate.
3. A signed hotel registration card from each guest (hotel). Meeting Planner/End User delivers documents to the hotel in alphabetical order (check in day). 100% of the participants information is mandatory.
Payment for the hotel and auxiliary services must be made by check, credit card or wire transfer issued abroad by the event organizer or travel agency on behalf of the attendees.
Full Company payments must be received on time as per contract.
Full payment received directly from attendees are not included under this law.
It is responsibility of the Event Organizer / Meeting Planner to:
1. Meet all above listed conditions. If the client does not meet all conditions, the standard 16% VAT will be charged to the organization as dictated by Mexico law.
2. To deliver these copies in alphabetical order with copy of the rooming list to the hotel. 100% of the participants information is mandatory.
3. It is not responsibility of the hotel to provide paper and/or copy machine.
4. Benefit will be considered in the master bill only after all payments are received (not to be deducted).
5. This benefit needs to be confirmed by the meeting planner to the Conference Services Manager with a minimum of 180 days prior to the group arrival.
6. This benefit will not apply for groups in house without previous notice.
7. This benefit does not apply for Mexican participants even when they may be part of the group program.