Reply
cancel
Showing results for 
Search instead for 
Did you mean: 
Reply

Mexican Withholding Tax on Upwork Earnings

mafervega
Active Member
Maria Fernanda V Member Since: Oct 20, 2016
81 of 98

Hello!

 

Is there any information regarding Upwork's RFC number? It is my understanding that we need it in order to register as recieving income from digital platforms. 

9769adcc
Active Member
Arturo V Member Since: Feb 8, 2021
82 of 98

Still no word yet, UpWork seems to be already applying the new rules without having provided us with the legal name of the company registered in Mexico, which is the minimum we need to be able to make our tax regime change. Everything indicates that they are having delays with the registration in Mexico, welcome to the Mexican bureaucracy

maytemontano
Active Member
Mayté M Member Since: Nov 21, 2019
83 of 98

Hi Lena:

 

For the ISR, Upwork needs to issue a "CFDi Certificado de Retencion" (Electronic document for withold certificate) with the amount withhold so we can claim the ISR tax credit for the amount withold.

 

As for the IVA (VAT), Upwork needs to issue a "CFDi Ingreso" (Electronic Sale Invoice) for the comission and the VAT amounts so we can credit the VAT amount and the comission as expenses in our tax declaration.

Both of those documents need to be issue at least monthly each.

 

Regards,

 

Mayté M.

maytemontano
Active Member
Mayté M Member Since: Nov 21, 2019
84 of 98

I urge Upwork to do a throughfull study of this new Mexican law; I checked with a tax firm and, as some other freelancers already stated, this law applies for services such as AirB&B, Uber, etc, where both entities, the one providing the service and the one receiving the service, are located in Mexico.

 

For Upwork pourpuses this is what applies for freelancers based in Mexico:

  1. Upwork must generate a CFDi Ingreso (Invoice) for the comissions the freelancer pays to Upwork and include 16% VAT over those comissions.
  2. When the client is located inside Mexico, Upwork must retain 1% or 20% as ISR tax withhold over the amount paid to the freelancer and generate a CFDi Retencion for the amount withheld.
  3. When the client is located outside Mexico no ISR withold applies.

So basically this only applies when the client is also in Mexico.

 

Please Upwork!, do not over retain to freelancers.

 

Regards,

 

Mayté

9769adcc
Active Member
Arturo V Member Since: Feb 8, 2021
85 of 98

I share your concern Mayte, it seems that Upwork received bad guidance on the subject of the new tax reform, from a bad accountant or from the same SAT offices to collect more money from us as freelancers. As it has been said several times in the forum, Upwork should provide us with your RFC as a company as well as all the details that concerns, as well as the CFDI to make our tax deduction. It is also very sad to know that we lose competitiveness as Mexicans on the platform, as it would now be (20% commission from Upwork, 16% VAT plus 1% tax withholding giving a total of 37% of money in taxes) As service providers to a foreign company that 16% would be converted to 0% to be competitive in the international market. So now it only remains to think that every time you take a job on the platform you take that 37% of the total unfortunately because Upwork was not well informed on the subject that their plattform does not enter in this new tax reform.

 

rayfreelance
Active Member
Raymundo L Member Since: Apr 18, 2019
86 of 98

Hi Arturo,

1% ISR? Upwork retaining 1% doesn't mean we will pay 1% ISR we have to pay ISR  based on income 😂 see the attached image

9769adcc
Active Member
Arturo V Member Since: Feb 8, 2021
87 of 98

1% tax witholding, my bad. Thanks for the observation.

alexantares
Active Member
Alejandro R Member Since: Apr 10, 2017
88 of 98
It would be good to open a ticket with the information you provided. We will make sure they hear our voice.
alexantares
Active Member
Alejandro R Member Since: Apr 10, 2017
89 of 98

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. 

pradeephele
Moderator
Pradeep H Moderator Member Since: Jan 11, 2021
90 of 98

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.

Untitled