Part 1: Main Aspects of the 2nd Modification of the Miscellaneous Fiscal Resolution for 2020
The Mexican Tax Administration (SAT) released the second modification of the Miscellaneous Fiscal Resolution for 2020 (RMF2020). This is the first of two blogs, where we address some of the main changes in compliance obligations for suppliers of digital services not established in Mexico, and local suppliers of services using those platforms for sales. As a reminder, a new regime became effective on 1 June 2020, imposing an obligation to withhold, collect, report and pay income tax and VAT on foreign suppliers of digital products when consumers of those goods and services are located in Mexico. This modification of the RMF2020 introduced the following changes and clarifications to ease compliance with those obligations:
- Tax returns used by suppliers of digital services and local suppliers of that ecosystem: To clarify these obligations, this modification of the RMF2020 has introduced new returns and/or changed the names of the existing ones, to ensure foreign suppliers and local taxpayers use the correct return depending on the applicable regime. (See table below)
- Place for payments: New provisions have been added to establish that foreign suppliers may opt to pay the VAT applicable to their activities using the local currency (Mexican pesos) or using American dollars. Those payments can be made via the foreign accounts of the Mexican Treasury (TESOFE) or via domestic entities authorized by the TESOFE, when the foreign supplier opts for that choice during his registration process at the SAT.
- Are VAT and Income Tax withheld to local suppliers definitive or not? The choice is in the hands of the local supplier. For those under the threshold established by law, a rule was added for individuals to formally notify the SAT of their choice for the income tax withholdings and the 8% VAT made by digital platforms.
- Cancellation of transactions, credits and refunds of income tax and VAT: New rules were added to the RMF2020 to allow individuals subject to the regime of definitive withholdings and payments, to modify their periodic income tax returns when sales under that regime have been revoked or discounts given to clients. When local users of the digital platforms make direct or indirect sales to clients cancel transactions, they’re allowed to file a supplemental return, once they issue the corresponding CFDI of Egresos or proceed to cancel the CFDI following the procedure established by current regulations. A similar procedure should be followed for VAT.
Once these procedures are concluded, the local supplier can request a refund of the excess income tax and VAT paid for the cancelled or modified transactions, using the Electronic Form for Refunds (FED). Finally, it’s worth mentioning that if a local direct seller not subject to the regime of definitive withholding via digital platforms, is the one making a cancellation of a transaction or providing a credit, a new rule was added to allow them to modify their VAT returns. This is done by issuing corresponding credit notes when sales have been revoked or discounts are provided to clients. In those cases, they should follow the standard procedure established by the SAT for cancelling CFDIs.
New and Modified Tax Returns Required to Digital Platforms and Foreign Suppliers of Digital Services and Local Suppliers
|Original name of the tax return||Translation||Purpose||Responsible|
|Declaración de pago del Impuesto al Valor Agregado, por la prestación de servicios digitales||Return for the payment of the Value Added Tax applied to supplies of Digital Services||File and pay VAT due on sales of digital products by foreign suppliers (music, apps etc.)||Foreign supplier of digital services|
|Declaración de pago del ISR retenciones por el uso de plataformas tecnológicas||Return for the Payment of the Income tax withheld for the use of Digital Platforms||File and pay income tax withheld by digital platforms to local suppliers using the platform.||Foreign digital platform|
|Declaración de pago del IVA retenciones por el uso de plataformas tecnológicas||Return for the payment of VAT withheld for the use the Digital platforms||File and pay VAT withheld VAT withheld to local suppliers of services using the platforms||Foreign digital platform|
|Declaración Informativa de retenciones por el uso de plataformas tecnológicas||Informational Return for Intermediation Services Provided by Digital Platforms||To inform the SAT the local suppliers providing services via the digital platforms||Foreign digital platform|
|Declaración de pago del ISR personas físicas plataformas tecnológicas||Return for the payment of personal income tax – digital platforms||To file and make provisional payments of income tax due by individuals that use digital platforms to sell goods and services||Local supplier using a digital platform|
|Declaración de pago del ISR personas físicas plataformas tecnológicas||Return for the payment of the income tax of individuals – Digital platforms||To file and pay the definitive income tax by individuals receiving direct payments from their clients via digital platforms, if tax was not withheld by the platform.||Local supplier using a digital platform|
|Declaración de pago del IVA personas físicas plataformas tecnológicas||Return for the Payment of VAT by individuals, Digital platforms||To file and pay the definitive VAT by individuals receiving direct payments from their clients via digital platforms, if tax was not withheld by the platform.||Local supplier using a digital platform|
|Declaración de Pago del ISR personas físicas Plataformas tecnológicas||Return for the payment of the income tax of individuals – Digital Platforms||To file and pay the income tax by individuals making direct sales and do not opt for considering the withholding made by digital platforms as definitive payments.||Local supplier using a digital platform|
|Declaración de pago del IVA personas físicas plataformas tecnológicas||Return for the payment of the VAT of individuals – Digital Platforms||To file and pay the VAT by individuals making direct sales and do not opt for considering the withholding made by digital platforms as definitive payments.||Local supplier using a digital platform|
In the second part of this blog, we’ll explain other important regulatory changes related to Mexico’s e-invoicing mandate and VAT compliance introduced by the Miscellaneous Fiscal Resolution.