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Mexico Readies Rollout of Tax Deal With Technology Platforms

Mexico Readies Rollout of Tax Deal With Technology Platforms

(Bloomberg) -- Mexico’s Finance Ministry plans to announce the roll-out of a landmark tax deal with technology platforms in the coming weeks, a top official said Monday.

Deputy Finance Minister Arturo Herrera confirmed the plans in an interview at Bloomberg News offices in Mexico City, while declining to elaborate. Bloomberg reported in November that the previous administration reached an agreement with Uber Technologies Inc. in which the platform will withhold taxes from partners who gain income from both its ride-hailing and food delivery services.

The country has been looking for ways to boost tax collection that’s the worst among members of the Organization for Economic Cooperation and Development. The previous administration was also in talks with Netflix Inc. to collect sales taxes from users. Airbnb Inc. had stepped away from talks that would have required the home-sharing website to collect income tax from its hosts.

The program wouldn’t create a new tax but would collect what drivers should already be reporting and paying monthly. More than half of Mexico’s population works in the informal economy and doesn’t pay income taxes.

Herrera said that the administration of President Andres Manuel Lopez Obrador, who took office in December, needs to do more to explain its policy decisions to the business community. The private sector invests 6.7 times the amount of the government, making its commitment indispensable for economic growth, he said. AMLO, as the leftist president is known, surprised investors by ditching a $13 billion airport project, sparking a rout in Mexican stocks, bonds and currency.

"I think it’s on our side to make sure that we have a much more cohesive narrative so that we are able to send a clear message to the private sector," said Herrera, who previously served as finance minister for Mexico City and worked at the World Bank. "In order for us to grow faster this year and in the years to come, we need a private sector that is confident and that is facing clear rules of the game, and we’re going to be working towards that."

To contact the reporters on this story: Eric Martin in Mexico City at emartin21@bloomberg.net;Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Robert Jameson

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