Tax for digital nomads: An equitable solution in Mexico?

Remote workers flocking to Mexico, driving up prices for locals

Digital nomadism, a trend growing exponentially around the world, has arrived in Mexico with force as remote workers from the U.S. and elsewhere flood Mexican cities, posing unique challenges and opportunities.

The influx is most apparent in Mexico City, the largest city in North America. Local representative, attorney and activist Frida Guillén has proposed a controversial measure: a tax that seeks to balance the economic impact of digital nomads in the Mexican capital.

Taxing the Digital Nomads

In an increasingly digitalized world, the way we work and live is undergoing profound transformations. The information age has given rise to a new generation of professionals known as "digital nomads."

These individuals have the ability to work from anywhere in the world, as long as they have access to an Internet connection. Countries like Spain have recognized the economic value that these nomads can bring to communities with low populations, encouraging their arrival.

However, in Mexico, a controversial measure has been proposed that seeks to tax these independent workers with a daily tax after a certain length of stay, in order to compensate for their impact on the local population.

I applaud the arrival of digital nomads to our City and the economic spill they represent.
Unfortunately, [Mexico City residents] suffered up to 60% increase in rents in the areas where they are established.

That's why I have proposed the creation of the tax on digital nomads, to invest the proceeds in the construction of social housing, transport and urban services in the forgotten areas that do not attract foreigners but are a refuge for those displaced by gentrification. - Frida Gillen

The Proposal to Reform the Tax Code

Guillen is the force behind the proposal to reform the Tax Code of Mexico City. Its essence lies in the request that lodging service providers withhold a specific amount as tax from those tenants who stay for more than 20 nights.

To determine the amount of the tax, Guillen's measure would apply an Update Measurement Unit (UMA) for each additional night. The UMA is a scale that is based on a proportion of the minimum wage in Mexico and is used to adjust various tax and financial aspects.

According to data presented in the proposal, it is estimated that there are more than 90,000 digital nomads throughout Mexico. Their impact on the economy is estimated at about 9.3 billion Mexican pesos, equivalent to approximately US$476 million. The measure aims to cushion the impact on rental prices, which have increased on average by 13.63% so far this year.

The Perspective of Digital Nomads

The proposal has generated intense debate. While some argue that taxing digital nomads is a way to share in the economic prosperity they bring, others believe it could have a negative effect on Mexico's competitiveness as a destination for these professionals.

From the perspective of digital nomads, this measure could make them reconsider Mexico as a viable option for their lifestyle. Geographic flexibility is one of the main attractions of this mode of work, and a daily tax could be a deterrent to their choice of destination.