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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
lucioric
Community Member

Yes, I just found when browsing the SAT page, that Upwork does has a RFC number already. But according to Valeria's post, should we wait for the invoices are made to tell the accountant that Upwork has already an RFC?. Please try to have it in november, before 25, so we can include that in the november tax declaration and deduct the tax returns in december.

You will see that also Microsoft, Amazon, Spotify, Google and Zoom have RFC, so its expenses are now deductible.

delatorre805
Community Member

Hello

I am new to upwork

This has been my first month

but my accountant is asking for a proper invoice so I can do my taxes

It looks like upwork has an RFC but I see in the comment above that we should wait to provide that RFC?

we should wait for the invoices?

can anyone help me, this is just so confusing 

thanks

167d953b
Community Member

Hello Hilda,
Yes, Upwork now has an RFC, so now you can register/update it on SAT's website.
But to make a correct tax statement, we must wait for Upwork to send us a CFDI for each work we have done.

abundis_sofia
Community Member

Hi, community, 

 

I would like to know if you have any updates about this. My accountant wants to know.

 

Thank you in advance!

adolfohc
Community Member

Hello Upwork,


Any news on this? We are about to end 2021 and I (we) haven't received our invoices for the witholded taxes. Please, could you share the status on this? On the comment from one of your moderators posted on October 11th below it says that you'll have the CFDIs ready before the end of November 2021.

 

Thanks

Adolfo

 

Oct 11, 2021 08:54:27 AM by Valeria K

Hi all,

Upwork has been implementing operational changes to comply with all Mexican Value Added Tax (“VAT“) requirements for digital service providers. This includes charging, collecting, withholding, and remitting Mexican taxes where required.

We are close to obtaining the Mexican tax registration required to remit taxes and withholdings and to issue electronic withholding invoices (CFDIs). The registration process has been delayed, but we expect to finalize the registration process by mid-October 2021 and to issue all pending withholding CFDIs before the end of November 2021. The CFDIs will include details of the withholdings applied (which is required to receive credits on your Mexican taxes).

Thanks for your patience and understanding during this process.

cc9e9a0b
Community Member

Hello Valeria, are there any news about this? 

delatorre805
Community Member

Hello any news on this? My accountant  is asking me 

also I had a question. It says my RFC is pending validación? What does that mean? I see in my reports that I get my taxes taken out 

Thanks 

nancyrojasdesign
Community Member

Hello Upwork moderatos!


I would like to ask you in which Tax Regime is Upwork (on its RFC/SAT)

 

Kindly, Nancy

AveryO
Community Manager

Hi Nancy, 

Upwork is a non-resident company based in the US providing digital services in Mexico. If you need help with filing your taxes in Mexico, or have further questions about this, it would be best to consult with a local tax advisor to help you with your concern.

167d953b
Community Member

Hello Avery and Valeria,

Is there any news about the CFDIs? I think none of us have received it yet.

Thank you.