Mexico: VAT and income tax

Value-Added Tax (VAT)

Upwork collects and remits VAT to the Mexican government as required by law. You can enter your VAT ID by visiting Settings and then selecting Tax Information. 

We are required to assess a 16% tax on these services:

Income tax

Upwork also collects and remits income tax to the Mexican government as required by law. We are required to withhold a 1% tax from your earnings if you enter an RFC (Clave en el Registro Federal de Contribuyentes) number, and it matches the Mexican Tax Administration Service's (Servicio de Administración Tributaria/SAT) records. 

If you do not enter an RFC number or if your RFC is rejected, we are required to withhold a 20% tax from your earnings. You can enter your RFC number by visiting Settings and then updating your Tax Information.

Please note that this information is for general guidance only, and for specific tax advice, consult your country's tax authority or a tax advisor.

Frequently asked questions

Who has to pay VAT?

VAT applies to services we provide to both freelancers and clients if they reside, have a permanent address, or are established in Mexico.

Why are you collecting VAT?

We’re required to comply with the tax laws of the countries where we operate to continue to do business in those countries. Mexico requires that we collect VAT on Upwork services and remit the tax to the government.

What if I’m only residing in this Mexico temporarily?

We are still required to collect VAT even if you are only residing in a country temporarily. If you move to another country, you can change your information by visiting  Settings  and then updating your  Contact Info. We will automatically adjust your VAT to correspond with the rates in your new country of residence or stop collecting if there is no VAT, or a similar tax, in your new country.

I’m exempt from paying VAT in Mexico. Are you still going to charge me VAT?

If you are exempt from VAT in Mexico, you can claim a credit from the Mexican government when you file your taxes. To claim a credit, your RFC number must be on file with us. You can enter your RFC number by visiting  Settings and then selecting  Tax Information.

When did Upwork start collecting income tax in Mexico?

This tax collection began in April 2021.

Do you withhold the tax before or after freelancer service fees are charged?

The withholding tax is calculated based on the gross amount that you invoice your client, so it is calculated prior to freelancer service fees.

I am a freelancer in Mexico, but I don’t think I have to pay income tax. What should I do?

Consult your local tax authority or a tax advisor to learn more about income tax in Mexico and your tax obligations.

What if I end up paying more in taxes than required?

You will be able to claim a tax credit or refund from the Mexican government if you pay more in taxes than required.  Consult your local tax authority or a tax advisor to review your situation.

What is an RFC number?

An RFC (Clave en el Registro Federal de Contribuyentes) number is the tax ID for Mexico. To register for an RFC number, visit the Mexico tax authority website.