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Mexican Withholding Tax on Upwork Earnings

lenaellis
Community Manager
Lena E Community Manager Member Since: Apr 7, 2015
1 of 145

*Updated 4/6/20

 

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.

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1f32be23
Ace Contributor
Oliver B Member Since: Jan 25, 2021
2 of 145

Hello everyone 

 

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 .

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
3 of 145

Hi Oliver,

 

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.

 

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ashleyellis
Active Member
Ashley Lynn E Member Since: Apr 4, 2021
4 of 145
Hi will upwork provide a statement each month of the Mexican tax they are withholding we can present to the Mexican tax system?
pradeephele
Moderator
Pradeep H Moderator Member Since: Jan 11, 2021
5 of 145

Hello Ashley,

 

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.

 

Thank you.

Pradeep H.

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ashleyellis
Active Member
Ashley Lynn E Member Since: Apr 4, 2021
6 of 145
Hello thank you. Will they think we are earning more than we are since it's
on the pre-upwork commission fee?
g_vasilevski
Moderator
Goran V Moderator Member Since: Mar 24, 2017
7 of 145

Hi Ashley,

 

For any additional information, I would suggest reaching out to a local specialist that can assist you further with this. Thank you.

~ Goran
Upwork
cc9e9a0b
Active Member
Raul L Member Since: Nov 17, 2020
8 of 145

when do you think you will have this available?

ambriz_perla
Active Member
Perla Margarita U Member Since: Mar 19, 2019
9 of 145

When is this going to happen? I cannot download any invoices except for the ones of the fees charged by UpWork.

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
10 of 145

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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