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Mexican Withholding Tax on Upwork Earnings

lenaellis
Community Member

[Updated March 2023] We would like to update you that we are working with our vendor to have the CFDIs sent out automatically. We hope that this will be functional within the next 2 months and will allow us to provide CFDIs to our Mexican freelancers on a monthly basis. We are continuing to send out any remaining CFDIs that have not been sent out for the last quarter of 2022 as we are aware of the income tax return due date of April 30. We appreciate your continued patience.

 

 

[Updated June 2022] We apologize for the current situation in which CFDIs have not been able to be fully provided  under your name. We are in the process of digitally stamping the CFDIs and we have increased our efforts during the month of June 2022 in order to be able to finalize additional processes and send you the pending documentation as soon as possible.

It is important to mention that any sanction that the tax authority could impose for the non-issuance of a receipt for withholding and payment will not fall on the recipients (i.e. users of the Upwork platform). We understand that at this time you have not been able to prove the calculation of withholdings on your taxes, however, we will notify you as soon as the receipts are issued so that the withholdings may be used by you.

 

[Updated April 2022] We thank you for your patience. As of today, we are able to issue CFDIs for most of the transactions in Mexico and have begun processing all calendar year 2021 transactions. We will email your CFDIs in the coming weeks, but if you need to request that we expedite the process, please submit your request to support@upwork.com and we will send you your CFDIs as soon as we can. 

 

The email with your CFDIs will come from Reachcore (servicioalcliente@reachcore.com). Please add this email to your safe sender list to avoid this email being filtered as spam. The  subject of the email will be “Envío de comprobante fiscal”. In some cases, the email will come from tax@upwork.com.

 

We thank you again for your patience and please do not hesitate to reach out to us if you have any questions.

 

[Updated February 2022] We would like to take this opportunity to update you on the latest status of issuing CFDIs in Mexico. As you are aware, Upwork began income withholding in 2021. However, there was a delay in our registration process due to the complexities of a non-resident entity obtaining tax registration in Mexico. That being said, we successfully registered for tax registration in Mexico at the end of 2021. 

 

Now that we’re registered, we've worked tirelessly to issue CFDIs for income withholding that we have made. We were in discussion with one "Proveedores Autorizados de Certificación" (PAC) vendor, but due to the vendor's inability to meet our high data protection requirements, we made a difficult decision to move in a different direction. As much as we want to issue CFDIs ASAP, our user's data privacy is our primary priority and therefore we want to work with the right vendor who maintains high standards of securing our users’ data. A few weeks ago, we entered into a contract with a different PAC vendor and we are currently working through testing of our integrations. Once completed, we hope to issue the CFDIs shortly thereafter.

 

We are aware of the income tax return due date of April 30th, and we will provide an additional update as soon as we have a clear timeline of delivering CFDIs to you. We are working tirelessly to get this done within a reasonable timeframe, and appreciate your continued patience. 



 

[Original Product Release] Upwork has begun withholding income tax from payments to freelancers and agencies based in Mexico as part of the tax law enforced by the Mexican government which became effective June 1, 2020 and was modified effective January 1, 2021 (the Resolución Miscelánea Fiscal). This law requires businesses like us to collect income tax on the earnings of service providers who are based in Mexico, such as freelancers and agencies who use Upwork.

 

As part of our continued efforts to remain compliant with tax laws in Mexico, we are asking that freelancers and agencies based in Mexico provide their Clave en el Registro Federal de Contribuyentes, Income Tax Identification number (RFC) in their Tax Infosection under “Settings”

 

By providing a valid RFC number you are subject to significantly lower tax withholding.

  • If you provide a valid RFC number we will withhold 1% of all your Upwork earnings, starting with all payments made on or after April 6, 2021. 

 

  • If you don’t provide a valid RFC number we will withhold 20% of all your Upwork earnings, starting with all payments made on or after April 6, 2021. 

 

This withholding is required by Mexican law and all funds withheld will be passed to the Mexican government. You will be able to claim a tax credit or refund from the Mexican government should you pay more taxes than required.  


We also want to give you a heads up that the same legislation included adding a Valued Added Tax (VAT) on digital services. Upwork is required to collect VAT on its fees charged to users in Mexico. We have begun configuring our system to be able to collect VAT, and we will let you know when we have a target date to start collection. 

 

For additional information see our Help center article and for questions about withholdings and how this applies to you, we suggest you contact a trusted tax advisor. We cannot provide tax advice.

307 Comments
JoanneP
Moderator

Hi Gerardo,

 

Unfortunately, we cannot provide specific tax advice. Since we want to make sure you receive the specific information you need, we suggest you contact a trusted tax advisor.

escobar_irene
Community Member

I want to know which is Upwork's RFC. I spoke with a tax advisor in my country and he asks me about that. I need that in order to be able to claim a tax refund from the Mexican government.

gabyo21
Community Member
There is no way, no way I'll provide my RFC to you, gosh I miss Elance...
lucioric
Community Member

Yes, Upwork needs a RFC id so that we can get tax refunds. Please, Upwork staff, get advice about that.

1be4f80b
Community Member

Hi, I've been trying to fill the W-8BEN form and have a lot of questions. 

I am a mexican freelancer and have trouble with this section: "Taxpeyer's U.S. Tax Identification number (SSN or ITIN), if required". Do I need a US bank account? Can someone guide me. 

Also, once I've filled the form, what do I do with it? Do I have to send it somewhere?

Thank you and I hope someone can help me understand,
Andrea. 

NikolaS
Moderator

Hi Andrea,

 

Thank you for reaching out to us. I would like to clarify that the Form W-8BEN is a form used to confirm you’re not a U.S. taxpayer and that Upwork is not required to withhold taxes from your earnings. For record-keeping purposes, Upwork requires a Form W-8BEN for all non-U.S. taxpayers paid on Upwork. Once you file your Form W-8BEN, the system will activate your eligibility to access funds immediately. You will be able to complete this form on your profile. 

 

To provide Upwork with your Form W-8BEN information

 

  • Go Settings  Tax Information
  • Provide us with your legal name and address

 

You can use your own legal name as it appears in your passport or other official documents. For more information please feel free to check this help article.

 

Additionally, you may want to check these threads to help you get started on Upwork:

 

 

Thank you,

lopezdp
Community Member

Ahhhh. The idea of the distributed application; maybe one day...

 

A boy can dream.

 

lopezdp
Community Member

but if they applied it after the fee, then the government would make less money...

 

😂 

samantharop
Community Member

Hello Raymundo,

 

I totally agree with you,  freelancers should not have to pay like if we were the platform providing the service.

 

I would like to ask  for your help, how do you declare your upwork transfers of money to  the SAT?

 

I appreciate in advance your time and generosity sharing some knowledge with me

 

 

 

rayfreelance
Community Member
Hi Samantha,
I used to work for mexican companies (asalariado) first I made an appointment with SAT to declare my activity has changed to freelancer (persona física con actividad empresarial/profesional) in my case as a provider for technology/technical services.
A friend of mine is an accountant with knowledge of taxes, he mades my declaration on a monthly basis and anual declaration on april (I pay for the service and he gives me an envoice that actually I can deduct from my income) since my clients are from countries different than México I don't need generate an invoice and my taxes are 100% ISR

I hope this helps