Last week, senior Mexican lawmakers submitted a bill to impose a 16 percent value-added tax on Internet companies such as amazon, Uber, AirBnB and other popular platforms, and to implement a new policy for overseas e-commerce starting June 1, 2020.

According to Amazon's email, the seller did not provide a valid RFC ID, so the platform will withhold VAT 16% and income tax 20% to the Mexican government, which are non-refundable.

Regarding the new tax law in Mexico, Ambo accounting firm attended two Amazon official tax training meetings, and focused on the issues that people were concerned about.

1、Who needs to register?

Sellers with FBA or local overseas warehouses in Mexico are required to register, which is similar to the requirements in Europe. Customers whose inventory is sold remotely from warehouses in North America to buyers in Mexico will not be affected by the new policy.

2、Mexican tax number Name:

Registro Federal de Contribuyentes (RFC) Federal Registry Registro Federal de Contribuyentes (RFC)

3、What happens if a Chinese seller doesn't have a Mexican tax number?
If the Chinese seller does not have the Mexican RFC tax number, Amazon will not close the Mexican station, but will withhold two kinds of taxes, value-added tax and income tax, which Amazon will pay a total of 36% based on the monthly sales of the seller.

 
4、What if THE RFC tax number is uploaded?

If the Chinese seller has RFC, if the RFC is registered by an enterprise, the VAT rate is still 16%, but can be 100% refunded; if the RFC is registered by a natural person, the VAT rate is 16%, and can be returned to 50%.

For Chinese sellers who upload RFC, if they are enterprises registered RFC, the income tax rate is 0%; If the RFC is registered by a natural person, the income tax rate is 0.4-5.4%.

 
5、Will pre-registration sales be taxed?

No income tax will be levied on sales made before June 1. The first tax will be levied on June 25. The tax will be levied from June 1 to June 25.

 
6、Do I need to register for parcel direct mail?
If it is MSN direct mail, whether it is shipped from China or the United States, it does not need to register RFC, nor does it fall under the requirements of the Mexican tax reform.

7、What is the requirement for RFC tax number?

Each seller account needs an RFC, and the registered company/legal person information is exactly the same as the company/legal person information behind the Amazon account. It is not allowed to use the same tax number for multiple accounts, which is the same as any other site of Amazon.

According to the new e-commerce law, it is necessary to register the company's VAT number in the Federal Taxpayer Registry to do business in Mexico. The details are as follows:

1. If you are a legal entity, the documents required to apply for a Mexican tax number are:

1, your company's business license and The Hague certification and notarization. Upon receipt of the documents, we will deliver them to a notary in Mexico who will negotiate and translate them so that SAT (Mexican Tax Office) accepts the documents and allows them to register in the RFC. It must be re-notarized and agreed upon before the Mexican notary.

2. Letter of Authorization. Your company must authorize us to perform this procedure prior to SAT, in which case we recommend that it be done through our Mexican legal representative. Once we receive the power of attorney, we deliver it to the notary, who will agree and translate it so that SAT will allow the process to proceed on your behalf.

                  Power of attorney                                         Hague certification template

2. Regarding the way monthly sales and taxes are calculated, we contacted the Tax Administration Service to ensure that all information is available:

1）The State Administration of Taxation informed us that VAT and ISR (corporate income tax) must be paid on a monthly basis, as there is currently no bilateral exemption treaty to not submit ISR to Mexico, which is a new activity that has not been considered.

2）To file these taxes, the Sat requires us to comply with electronic accounting under Section 33 of the Federal Tax Code and mentions that we must comply with the following:

》》Supporting accounting records or entries, including tables of accounts to be used for this purpose, and policies for such records and entries;

》》Bank statements and reconciliation of deposits and withdrawals in connection with accounting records, including statements of investments and credit, debit or service cards.

3. Tax types and tax rates

1、VAT is still 16%, but after registering the RFC tax number, you will have the right to declare and deduct your input tax normally, provided that you need to provide the invoice approved by the tax bureau. We will give you specific guidance later.

2、For income tax requirements, read according to Mexican tax law

Natural and moral persons are obliged to pay income tax if:

1) Mexican residents, regardless of their source of income, should be considered in their entirety.

2) Foreign residents with a permanent establishment in the country are attributable to the income of that permanent establishment.

3)Income derived from a source of wealth located in the territory of the state shall not belong to the state in which the resident of the state has no permanent establishment or occurs.

We had discussions with the Mexican tax office and they mentioned to us that the Chinese cross-border seller is under the section III assumption and therefore the seller must pay income tax in Mexico because there is no treaty exemption for trade activities.

But when you get the RFC tax number, you can give us your related cost and expense bill, as one of the ways to reduce the profit, so as to reduce the tax payable.

In short, if the Chinese seller has overseas warehouse in Mexico, it is best to register the local tax number RFC, so that you can reduce the tax deducted later. Both natural persons and corporations can complete the registration of your local tax number through our local Legal representative in Mexico. After registering RFC, the seller can normally and legally claim for the deduction of your input VAT, and the corporate income tax is only for the income of the Business in Mexico. After deducting all the expenses and costs that can provide the invoices that meet the requirements of the tax bureau, the corporate income tax shall be paid on the remaining profits. So your tax rate will be This is far less than the 36% withheld directly by Amazon because there is no RFC tax number.