Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received via Solar Staff by themselves.

To carry on tax accounting in Mexico for your Solar Staff income, you need to:

Mexico taxes its residents on their worldwide income, while non-residents are taxed on Mexican-source earnings only.

You are considered a Mexican tax resident if:

Taxpayers are required to file a notice of suspension of activities (aviso de suspensión de actividades) if they terminate their economic activities or change their tax residency (instructions).

In order to legally receive income in Mexico, you must have the Mexican TIN (Tax Identification Number) called RFC (Registro Federal de Contribuyentes). Important:

RFCs are assigned by Mexico's Tax Administration Service (SAT). They contain 13 characters in the case of individuals (4 letters + 6 digits + 3 alphanumeric characters) and 12 characters for legal entities (3 letters + 6 digits + 3 alphanumeric characters). The document confirming and carrying the RFC is called CIF (Cédula de Identificación Fiscal, or taxpayer identification card). It is issued by the Mexican government to each taxpayer to be used for opening bank accounts, obtaining loans, paying taxes, and so on.

Useful links: obtaining RFC and CIF, RFC examples, more about RFC and CIF.

Tax liabilities in Mexico depend on the freelancer's regime and/or fulfillment of certain conditions. To change your tax regime in Mexico, you need to file an update notice on economic activities and obligations (aviso de actualización de actividades económicas y obligaciones). There are certain requirements that apply irrespective of the tax regime, such as the need to issue invoices through an electronic platform:

Read on for more details.

The fiscal incorporation regime can be applied by individuals with an annual income from business activity of up to MXN 2 million, provided that the person is not in a partnership with a legal entity and does not require a professional title to carry on business. This regime offers attractive tax benefits.

RIF includes the following taxes:

Value-added tax (Impuesto al Valor Agregado, IVA) on the supplies of goods and provision of services: guide here.

Special tax on production and services (Impuesto Especial sobre Producción y Servicios, IEPS): learn more here.

Income tax (Impuesto Sobre la Renta, ISR) is calculated taking into account the following offsets: in the first year, the ISR amount is reduced by 100%, in the second year – by 90%, and so on for 10 years. The tax is accrued at a rate between 1.92% and 35%. The tax is paid every 2 months. You must make the bimonthly payment and submit your RIF returns no later than the 17th of March, May, July, September, November, and January of the following year. Learn more about reporting, reductions, and calculation.

Go here for step-by-step instructions on filling out returns for all the taxes.

The simplified trust regime was introduced in 2022. It can be applied by individuals who engage in professional or business activities and whose income from such activities doesn't exceed MXN 3.5 million per year. The advantages of this regime include not having to keep accounting records, profit and loss reports, and so on, because the taxes are calculated based on collected tax invoices.

RESICO includes the following taxes:

Value-added tax (IVA) on the supplies of goods and provision of services: calculated at the general rate of 16% (in border states, the VAT rate can be reduced by 50%, making it 8% instead of 16%).

Income tax (ISR) is calculated based on gross income (no deductions) at the following rates:

RESICO taxpayers must pay the above taxes and make the following declarations:

It is possible to permanently lose the right to use this regime in the following cases:

If the taxpayer's income exceeds the MXN 3.5 million limit, it is possible to switch to paying taxes as an business and professional activity regime.

The business and professional activity regime can be applied by individuals who receive income from commercial and professional activities. There are no restrictions on the amount of income and types of activity (this regime covers about 40% of individuals in Mexico).

RAEP includes the following taxes:

Value-added tax (IVA) on the supplies of goods and provision of services, levied at a rate of 16% or 8%.

Income tax (ISR), calculated based on gross income at the following rates:

The tax amount can be reduced through the following deductibles:

Expenses and investments necessary for carrying on business, as well as annual expenses (see here for a full list of deductions).

RAEP taxpayers must pay the above taxes and make the following declarations:

Introduced by SAT in June 2022, the digital platforms regime sees income come in from digital platforms. It applies to both the person receiving income as a user of a digital platform and the digital platform itself, provided the individual's annual income (including salary and interest) does not exceed MXN 300,000.

To find out whether SAT considers a particular platform digital, use this List of Digital Service Providers (Solar Staff is not on the list) published in the Federation's official bulletin. If the relevant company is on that list, you have to register as a person receiving income through digital platforms. We recommend contacting the platform's support to find out whether they owe you (or are going to make) the respective withholdings.

Under Régimen de Plataformas Tecnológicas, when you provide your RFC to the platform, your tax liabilities are as follows:

Income tax (ISR): When paying you, the digital platform withholds and transfers tax to SAT as an advance calculated as a percentage of the total income (excluding VAT), and does so at the following rates:

Value-added tax (VAT, IVA) on the supplies of goods and provision of services, levied at a rate of 8% (learn more). To learn which digital services are subject to VAT, see here. For VAT purposes, digital platforms acting as intermediaries are legally obliged to request the following information from customers:

Lodging tax (Impuesto Sobre Hospedaje, ISH): Only applicable in the case of accommodation lease services rendered through platforms like Airbnb (learn more).

To make use of this regime, you must submit a notice so that the withholdings made by digital platforms are considered final (within 30 days after the first income under this regime). After opting for this regime, you cannot change it for 5 years (starting from the date of the notice).

The above rates are final if annual income does not exceed MXN 300,000 (there are no deductions, and you must provide documentary evidence of tax remittance by the platform); if the income limit is exceeded, the tax is calculated at RAEP rates (deductions available).

Régimen de Plataformas Tecnológicas taxpayers must pay the above taxes and make the following declarations:

These reports must be filed monthly, no later than the 10th day of the following month. Step-by-step instructions for filling out and filing are available here.

If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].