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Mexican Withholding Tax on Upwork Earnings

Active Member
Miguel G Member Since: Feb 15, 2021
21 of 145

Hello! I'm currently new to Up, I already have my first earnings on the platform. Today I came up with the notifcation of updating my RFC wich if its not concieved it will witheld the 20% of my earnings, My question is: Does this mean that this 20% is an extra from the default 20% that Up withelds? giving a total of 40% less of my total earnings? 

Also, if I have my earnings still on Upwork and I update my RFC. could I recieved them with just the 1% of witheld, whitout the 20%? 


Hope this make sense since I'm a little bit confused here 

Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
22 of 145

Hi Miguel,


Thank you for your question. The withholding tax is calculated based on the gross amount that you invoice your client, so it is calculated prior to freelancer service fees or any other fees that may reduce the amount credited to your account. Also, please note that we won't start collecting this tax before April 1, 2021. So it will not apply to your earnings before then. 

~ Valeria
Active Member
Miguel G Member Since: Feb 15, 2021
23 of 145

Got it, so this means that I would only get the 20% fee for the Up freelancer services right? 

Community Guru
Lucio Ricardo M Member Since: May 16, 2018
24 of 145

Hi, every dollar that is retained from Upwork as ISR or IVA, should not be paid by you again, but you need to inform Hacianda that Upwork already retained you that tax.

Active Member
Gaby O Member Since: Apr 26, 2016
25 of 145
There is no way, no way I'll provide my RFC to you, gosh I miss Elance...
Active Member
Rodolfo Emmanuel S Member Since: Nov 14, 2017
26 of 145
Exactly. We are not providing digital services.
Active Member
Arturo V Member Since: Feb 8, 2021
27 of 145

As Raymundo says, the new tax reform does not contemplate this type of platform because it is not a luxury. Upwork is an intermediary platform that connects potential customers with people who provide a service. Also they should not withhold VAT because at the time of one as a Mexican resident providing a service abroad is taxed at 0% rate according to current tax laws (which dictate this reduction of VAT to avoid losing competitiveness in an international market).


I share the same experience as Raymundo, I have been working in Upwork for almost a year and all my tax obligations as a taxpayer have been presented accurately before the competent authority. And within my fiscal situation there is something called RIF regime, which gives me reductions on the ISR and VAT, which would be diminished because you would be withholding VAT without any reason.


Your legal team needs to get advice and investigate more about this new tax reform, because you are attributing to yourselves obligations that do not correspond to you.


Active Member
Alejandro M Member Since: Jan 7, 2019
28 of 145

I read the latest announcement regarding Mexican law requiring the retention of 1% or 20% of earnings from the invoice amount. What I would like to know is how are we going to prove to the Mexican Government that you are retaining that percentage of our income?


I am sure the mexican community has many questions too.

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

Hi Alejandro,


That's a great question! Upwork is in the process of getting registered in Mexico with SAT, so that we will be able to pay over and report to SAT all amounts withheld from freelancers in Mexico.

Under the rules we will be generating monthly digital invoices to our freelancers which show the transactions completed, and the withholding taken on those transactions. That information will be reported to SAT (the regulations are not yet in place, but we assume this is a quarterly report from Upwork to SAT). Since SAT will be receiving record of the withholding done, the freelancer will be able to claim that withheld tax when they do their income tax filings with SAT. (Unfortunately, we cannot provide specific tax advice. Since we want to make sure you receive the most accurate information, we suggest you contact a trusted tax advisor.)

Active Member
Raymundo L Member Since: Apr 18, 2019
30 of 145
Hi Vladimir
This is the worst decision that Up can make against mexican freelancers. Why is Up taking responsibilities that doesn't apply to this platform?

Let me tell you what will happen.
I currently pay around 15% of taxes (ISR)
If Up register with SAT I'll be force to generate an invoice (currently I don't need to generate an invoice because my clients are from all over the word and they're not mexican companies registered with SAT)

So, if I'll be force to generate an invoice my fees/taxes will be like this.
20% Up fee + 15% ISR + 16% VAT for creating an invoice + 10% exchange rate that we loose everytime that we transfer to our bank because in Mexico we can't have bank accounts in USD

Hahahaha we all know what this means, right? And what will be the future for Up related to mexican freelancers.

Second time that I suggest this. Up legal team must get a better advise on the new law and don't take a responsibility that doesn't apply to this platform.