Mexican Withholding Tax on Upwork Earnings
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[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 email@example.com and we will send you your CFDIs as soon as we can.
The email with your CFDIs will come from Reachcore (firstname.lastname@example.org). 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 email@example.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 Info” section 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.
Hello Valeria, are there any news about this?
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
Hello Upwork moderatos!
I would like to ask you in which Tax Regime is Upwork (on its RFC/SAT)
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.
Hello Avery and Valeria,
Is there any news about the CFDIs? I think none of us have received it yet.
Hi everyone, i'm newbie and i'm having some troubles with my foreign tax identifying number, appear like "pending verification" since beginning of the year and i'm concerned to work in a project and that the platform withhold 40% of the pay. Can anyone help me please?
Thank in andvance.
This will be validated soon. Once you've added your tax information, you will only be subject to 1% withholding tax. A 20.0% tax will be withheld from your earnings if you have not provided an RFC number to Upwork. You may read more about it here.
I think next topic here to solve is the CFDIs that Upwork needs to send to their Mexican users. Another document that would be helpful (and that tax advisor asked for) is the "Upwork's proof of tax situation in Mexico".
Unfortunately, in Mexico there is not a database as in US where we can retrieve this data or documents. This would need to be provided by the tax withholder.
Apologies if this could look "pushy" but the law here is very strict regarding this topic. The only thing is that we need these documents from Upwork. We wouldn't like to face fines or something worst as seizure of property from our side.
Nancy brings a fair point and I don't think it would be pushy, it has been 9 months since witholdings started and we were told we would start receiving them by November (which was already late)
Now near two months since that and still nothing
we're really in a tight spot while presenting our tax breakdowns because of this
and every comment just gets readio silence unless is any other question than
"When are we getting the CFDIs for the money being withheld?/What's the status on this?"
I totally agree. We need our CFDIs in order to make our tax strategies and Upwork is not really helpful with this. All the months I get questions about the CFDIs from my accountant and I don't know what else to tell her. At this point I'm disappointed.
I agree, it's not pushy at this point, we've all been very patient.
Every time I ask the support team about this I receive the same answer "the team is currently working on it and will let notify as soon as they have them." This has been going on for months...
I'm sorry but it's hard to believe you expect us to live in a limbo with such an important matter as tax payment for almost a year now.
I provided mi RFC since it was requested. I see that a 16% VAT and a 1% withholding tax are being applied. My only concern is that I can't download an invoice to show the Mexican government that I'm actually paying taxes for working on Upwork. Not sure if such invoices exist, or if they are available. I would really appreciate any help with this.
Hi Upwork moderators!
Just wanted to let you know that, I understand that paperwork for foreigns may take way more time than expected and Mexican goverment isn't always a candy apple...
If there is something I can do from this side, I would be glad to help!
Hi everybody, I totally agree with you, actually, I am tired of this situation and I haven't received any answer like most of you. So I asked my accountant and he said that what Upwork is doing at this moment is illegal since the company has been collecting taxes without delivering the CFDIs. Stated in another way, when Upwork was registered officially as a collecting taxes enterprise by the Mexican government Upwork has accepted all the obligations of Plataformas tecnologicas rules including the delivery of each monthly tax CFDI within the five days following the month in which the withholding is made. Therefore I invite the Upwork taxes team to either deliver our documents as soon as possible or return the tax withhold and start doing it again until Upwork can send the invoices. Otherwise, I will invite all of you to make a formal complaint to PRODECON in order that this institution helps us impose Upwork the appropriate fines resulting from this situation.
we're near the middle of February... we're steps away from being one year since this whole thing started and yet no answer, Upwork this is looking ridiculous at this point
can we get an answer of when we will start receiving our CFDIs?
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