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Digital Platforms Solutions

As from 1 June 2020, the Mexican Government requires that all the digital platforms in Mexico, such as Amazon, Mercado Libre, Airbnb, etc, withhold a percentage of their users’ sales as a tax payment.

Digital platforms are requesting all their users provide them their RFC, that is their Mexican taxpayer registry number. For now, only individuals are liable for this retention. Corporations will keep reporting their taxes as before.

It is important to clarify that when receiving income in Mexico for a commercial activity such as rent from a property or the sale of an item, you are obliged to pay taxes for such income. The two main taxes are IVA or VAT (Value Added Tax) and ISR (Income Tax). To be able to pay these taxes, it is necessary to have an RFC number.

You are required to pay these taxes as long as one or more of the following is true:

  • The business operation happens inside Mexico.

  • The payments are made through a digital platform located in Mexico.

  • They are requested from within Mexico.

  • A Mexican code phone number (+52) is used.

What are my obligations?

  • To be registered with an RFC.

  • To obtain your FIEL (advanced electronic signature)

  • To provide your tax information to the digital platform.

According to the new reform, if any natural person does not provide his tax information, the digital platform will be required to retain 16% of IVA (Value Added Tax) and 25 % of ISR sales tax.

If you provide an RFC, according to the platforms sales earned income, they are required to withhold 8 % of VAT and ISR from 0.4% to 10% of the income.

If you do not have an RFC, Mextax can offer you a solution according to your profile:

  • If you have a temporary or permanent residency in Mexico, we can help you get an RFC as an individual very quickly, and to provide your commercial activity accounting.

  • If you wish to have a Mexican company, we can assist you, from creating the company to making the monthly and annual statements.

  • If you would rather obtain a company ready to use for a limited amount of time, there is also a special solution for you.

Our Solutions

Accounting Services - Consulting - Integrated Solutions
ACCOUNTING WITH TEMPORARY OR PERMANENT VISA
REPORTING TAXES AS A CORPORATION

FAQ

Who is affected by Mexico’s digital platform tax rules?

Since June 1, 2020, individuals (not corporations) who earn income through digital platforms like Airbnb, Amazon, Uber, or Mercado Libre must comply with new tax obligations.

What is an RFC and why do I need it for digital platforms?

An RFC (Registro Federal de Contribuyentes) is your Mexican taxpayer ID. Digital platforms require users to provide their RFC to properly report and withhold taxes. Without it, higher tax rates will be withheld from your income.

What happens if I don’t provide my RFC to a digital platform?

If you don’t provide your RFC, the platform will withhold 20% Income tax (ISR) and 16% VAT (IVA) .

How much tax is withheld if I provide my RFC?

If you provide your RFC as an individual, digital platforms will generally withhold 8% VAT (IVA) and 4% ISR (Income tax).

Which taxes apply to digital platform income in Mexico?

Individuals must pay ISR (income tax) and IVA (value added tax) on income earned through digital platforms.

How do I know if I am required to pay taxes in Mexico?

To determine whether you are required to pay taxes in Mexico, Mextax will need to assess your specific tax situation. Our team offers personalized consultations to evaluate your fiscal residency status, income sources, and other relevant factors. Based on this assessment, we will advise you on your tax obligations in Mexico.

Can Mextax help me get an RFC?

Yes. If you have a temporary or permanent residency in Mexico, we can quickly help you obtain your RFC and manage your tax filings.

Can foreigners set up a company for digital platform income in Mexico?

Yes. Mextax can help you create a Mexican company, manage monthly and annual statements, or even provide a temporary ready-to-use company solution depending on your needs.

Do corporations need to comply with these new retention rules?

No. Corporations continue to report and pay taxes directly as before. The new retention rules mainly apply to individuals.

Contact us today for more information!