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 Info” section under “Settings”.
By providing a valid RFC number you are subject to significantly lower tax withholding.
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.
I just have received a notification regarding RFC. I landed to work on upwork home from Mexico.
Notification is saying like following:
"In compliance with Tax Law in Mexico, Upwork withholds a 1% Income Tax from your payments. The tax withheld is increased to 20% if you haven't already provided your RFC (Registro Federal de Contribuyentes)"
I'd appreciate for that if anyone can kinda help .
Thanks for your question. We expect to begin collecting this tax on April 1, 2021, but it may be a bit later. Please review the information included in the email you received, review the information shared here and feel free to follow up afterwards with us here in the Community if you have any questions. Thank you.
Thanks for your question. We will register with Servicio de Administración Tributaria (SAT) and remit the entire amount withheld to the agency. Under the rules, we will generate monthly digital invoices for you, and these will show all transactions. That information also will be reported to SAT, so they are aware of the taxes you have paid.
Hi Perla and Irene,
I understand your frustration. Upwork is in the process of getting registered in Mexico with SAT. We'll share an update and provide Upwork's RFC number as soon as it becomes available.
Thank you for your patience and understanding.
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