The following statement is attributed to Michael Petricone, senior vice president, government and regulatory affairs, Consumer Technology Association (CTA)®, regarding Article 18 H BIS of the Law Value Added Tax— a proposal being considered by the Mexican Senate in its 2021 Economic Package, which includes a ‘kill switch’ that would cut off internet access of non-resident entities providing services to Mexican customers for failure to comply with Mexico’s tax laws. 

“We are extremely concerned with this proposed ‘kill switch’ provision suspending the internet connection of foreign businesses providing services to Mexican customers for noncompliance with Mexico’s tax laws. This discriminatory proposal would violate numerous provisions in the United States Mexico Canada Trade Agreement (USMCA). More, the legislation does not consider other less damaging tax compliance remedies, such as simplifying the tax registration processes. Finally, it sets a disturbing precedent for other nations, which could set off a ‘race to the bottom’ and seriously harm global internet commerce. 

“Many of CTA’s more than 2000 members do business in Mexico and serve Mexican consumers. Mexican businesses, especially small businesses —who use online platforms, tools and services to compete in global markets—would be among the hardest hit by this provision. It’s an unfortunate break with Mexico’s open internet policies, which have spurred innovation and economic success. 

“We urge the Mexican Senate to remove the internet kill switch provision from its proposed budget, and consider other measures that comply with the USMCA and do not  damage consumers, businesses and the online economy.”