Airbnb Inc. has stepped away from negotiations with Mexico that would have required the home-sharing website to collect income tax from its hosts and send the money to the government, according to a person familiar with the talks.
After a year of discussions, an agreement was close: The company was to give the Finance Ministry a monthly report of taxpayer info and how much income each host generated. The company would also withhold a single-digit income tax, which it would remit to the government, according to the person, who asked not to be named because the information isn’t public.
The talks about Airbnb’s participation in the voluntary tax pilot program faltered a month before the agreement was to be announced, with the company saying it faced technical challenges to withholding income taxes from hosts, the person said. The talks are essentially dead for now, though Airbnb has other agreements in place concerning payment of a separate lodging tax.
“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,” an Airbnb spokesperson wrote in an email. Mexico’s Finance Ministry declined to comment.
Mexico was simultaneously negotiating a similar deal with Uber Technologies Inc., which resulted in a rule geared toward ride-hailing and food delivery services that rival ride-sharing company Cabify has joined.
The local tax question isn’t new for Airbnb. In May, the company reached an agreement with the Danish government to report users’ rental income to the tax authority. The deal in Mexico would have taken that one step further, with Airbnb not only reporting hosts’ income but also collecting and remitting the corresponding taxes.
Airbnb is working with hundreds of governments around the world to reach voluntary lodging-tax agreements. It’s begun sharing hosts’ income information, but has so far stopped short of collecting the taxes. Mexico, meanwhile, has been looking for ways to boost its tax collection, which is the lowest among members of the Organization for Economic Cooperation and Development.
The outgoing Mexico administration is also in talks with Netflix Inc. for an agreement to collect sales taxes from users, and the new government is expected to continue them. The talks are still in the early stage, the person said. Netflix, based in Los Gatos, California, declined to comment.