Mexico: Airbnb has backtracked from negotiations with Mexico that would have reportedly required the platform to collect income tax from its hosts and send the money to the government.
After lengthy discussions, an agreement was believed to have been close with the company giving the finance ministry a monthly taxpayer information breakdown and how much income each host had generated. The company would also withhold a single-digit income tax, which an anonymous source for Bloomberg said it would remit to the government.
Airbnb’s talks regarding participating in the voluntary tax pilot programme faltered a month before any potential agreement announcement, as it said it had faced technical challenges to withholding income taxes from hosts.
However, the home-sharing website said it had reached an agreement to pay a separate lodging tax in the country.
A spokesperson for Airbnb told Bloomberg: “As part of our commitment to dialogue and to enter agreements with local governments, we’ve reached seven deals to voluntarily collect and remit lodging taxes in Mexico on behalf of hosts.”
In response, Mexico’s finance ministry declined to comment.
This is not the first time Airbnb has been at loggerheads with governments worldwide over such issues.
The company reached an agreement in May with the Danish government to report users’ rental income to the tax authority. The deal in Mexico, however, would have gone a step further, with Airbnb collecting and remitting the corresponding taxes as well as reporting users’ rental income.
Airbnb is now working with hundreds of governments around the world to reach voluntary lodging-tax agreements. It has started to share hosts’ income information without collecting the taxes itself.
At the same time, Mexico is looking for urgent ways to boost its tax collection, which is the lowest among the members of the organisation for economic cooperation and development.