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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
gabyo21
Community Member

It's because Upwork is expanding at the expense of us Mexican providers, which of course they could care less about. Think this through, we have to pay taxes we might not even be required to pay -which is my case because of the profesional services I offer- and on top of everything we have to pay them their 20% commission? Time to find other options, this new **Edited for Community Guidelines** company they are creating un Mexico is just all to their advantage,

cc9e9a0b
Community Member

Hello, in order to accomplish tax regulations here in mexico, I need to generate invoices to upwork according to my accountant, that means that I need to write the upwork's rfc on those invoices, will upwork have a rfc soon?

cc9e9a0b
Community Member

when do you think you will have this available?

alexantares
Community Member

Dear Upwork

 

Please take care of this properly. You are not located in Mexico and you don´t have to be. Our clients are not located in Mexico and that means we are exempted to pay the ISR. Please do your research, you are not Uber. 

PradeepH
Moderator

Hello Alejandro,

 

Thanks for your question. We are required to withhold a specific percentage of your earnings, as defined by Mexican law. In Mexico, income tax withholding is a means of collecting a portion of the income tax owed by Mexican taxpayers on identified transactions.

Legislation that became effective as of June 1, 2020, and was modified effective January 1, 2021 (the Resolución Miscelánea Fiscal), 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. 

This means that if you are based in Mexico, we are required to withhold this tax from your earnings. We remit what we collect to the Mexican government. You can refer to this help article for more information.

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

 

Thank you

Pradeep H.

alexantares
Community Member
I want to be very polite on this. My trusted advisor said to me that a bad tax movement of Upwork could lead to the destruction of all your Mexican Freelancers.

My suggestion is that Upwork is who really needs to get tax advise. You are risking a lot just because you want to comply with a law that does not apply to you because we ARE already paying taxes and all the clients we have are out of Mexico and the law is very clear on that.

If you do wrong, you will charge all Mexicans 37% just in taxes + 20% Upwork Fees!! Will not be many Mexicans after that.

Please think twice before getting the RFC in Mexico. Uber is now facing obligations as its drivers are its employees under the same law you are running into with a smile in your face.

Thank you

Alejandro

alexantares
Community Member
It would be good to open a ticket with the information you provided. We will make sure they hear our voice.
alexantares
Community Member

Is this change in the Clave 2411 good for us? Or it leads us to the worst-case scenario? 

9769adcc
Community Member
Stop copy pasting the same text over and over again and give us clear answers or a moderator that knows what he is talking about, have some respect for us and have the time to answer properly. You are doing things wrong, your plattform does not enter on this new legislation as you think. Getting almost 50% of our income taken away paying extra taxes that do not correspond just because you guys don't do your homework is just unacceptable. And if you continue with this and do not provide the legal name of the company in Mexico or the RFC, we can't make any deductions without it, so practically you are stealing our money. I need the RFC before April end to make my deductions, if you dont have it, give back the 1% that you are withholding from all the mexican Freelancers.
nancyrojasdesign
Community Member

Hello Upwork Community, 

 

I'd like to show you how the goverment portal looks for Mexican citizens (see attached image), there is a field very important that asks for the RFC of the Tax Withholder, in this case is Upwork.

Do you have a date to let us know when you will provide this information? Each 17th of every month we declare our taxes in case that the platformn doesn't but since Upwork is already withholding taxes we need the RFC to fill this field as shown in the image.

 

Apple, Paypal, Amazon and other companies provide their RFC since they withhold taxes to the users who earn money through their platforms.

Here is a list of companies from all the world with RFC:
https://contadorcontado.com/2020/07/15/listado-de-prestadores-de-servicios-digitales/