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Everything you need to know about registering apps with the SAT

October 28, 2020

The government plans to block applications that are not registered on the Federal Taxpayers Register (RFC).

7 min read

The opinions of the employees of You are personal.

Everything you need to know about registering apps with the SAT
Everything you need to know about registering apps with the SAT


To ensure compliance with the Tax obligations for foreign technology platforms The Mexican government is considering blocking requests that are not registered with the Federal Taxpayers Registry (RFC), improperly withholding taxes, or failing to report their activities to the Tax Administration Service (SAT).

This is part of a draft decree that modifies and adds various articles of the Income Tax (ISR) and Value Added Tax (Value Added Tax) laws so that this legislation has a stricter control mechanism so that there are no serious tax omissions for digital service providers from other countries .

The registration of these companies in the tax register is compulsory; For this reason, the Ministry of Finance and Public Credit (SHCP) has published, by decree, in the Official Gazette of the Federation (DOF), updates to the list of companies that have already registered with the SAT and add up to 35 to the average of the last 31 August.

Also the SAT has activated a microsite where these technological platforms will be able to register and consult all the information on the new federal regulations.

For Victor Aguirre, a lawyer specializing in technology and startups, these proposals represent the country as a global example of tax collection: “In fact, Mexico has always been viewed as a model in the sense that it has implemented measures very quickly. by BEPS, which are fiscal policy proposals. Years ago I introduced transfer pricing, which is multinational. “

Aguirre reiterates that this new legislation creates “even ground” for overseas and national digital businesses as balancing tax obligations encourages competition and the development of innovation. “There used to be unfair competition, but this was due to a lack of regulation. Now both domestic and foreign digital service providers are on fair terms.”

It is also noted that the Organization for Economic Co-operation and Development (OECD) has carried out various studies and programs at the multinational level, such as a company that will have advantages in Mexico strategically transfer them to a country where it will Fall is a low tax rate and that’s where you pay tax. The OECD therefore has an action plan against tax base erosion and the carryover of profits to address the challenges of the digital economy. It takes two factors into account: It is highly immaterial and important. “

The bill even provides for the digital economy to “become more and more of the real economy for the OECD … their business models have some key features that may be relevant from a fiscal perspective”.

The change in legislation is necessary because “the law said that only residents are taxed, and these provisions date from the last century and are in a world where it is now possible to believe that someone is providing you with a service will provide, is not present, does not make sense your country of origin, ”emphasizes Aguirre.

Who pays taxes on this proposal?

Providers who provide services in Mexico for which consideration is charged and which are provided through applications or content in digital format over the Internet or other network. They may not even require human intervention. That means they can be automated.

As:

  • These for downloading or accessing images, movies, text, information, video, audio, music, games including gambling, other multimedia content, multiplayer environments, receiving mobile sounds, viewing online news, information about traffic, and weather forecasts Statistics; with the exception of downloading or accessing electronic books, newspapers and magazines.
  • Those that facilitate mediation between third parties who are service providers or new goods and their applicants.
  • Online clubs and dating sites.
  • Those of distance learning or of tests or exercises.

Those who provide access to related audio and / or video multimedia content via the Internet are considered to be taxpayers and the user viewing or downloading the related audio and / or video multimedia content is obliged to do so Levy and pay tax.

This means that users must be informed of the VAT for this service on every invoice and that the invoice must be included on their tax return. The service provider must also inform the SAT of all these processes and pay the corresponding taxes.

How is the tax levied?

If the user’s payment is made by debit, credit, departmental or prepaid card, then the banking institutions and the issuers of those cards must collect the tax.

The collection takes place at the time of payment for the provision of the service, which consists of granting access via the Internet to the associated audio and / or video multimedia content, and must be reported no later than the 17th of the month after the in which it was carried out.

What should companies do?

  • Register in the RFC and process your extended electronic signature. If they are already registered, they need to update their economic activities.
  • Appoint a legal representative before the SAT and provide a domestic address to report and monitor tax compliance.
  • You must withhold VAT and, if applicable, the ISR from individuals and submit them to the SAT by electronic declaration that they will submit no later than the 17th of the following month.
  • The corresponding VAT (16% on the consideration charged in the corresponding month) is paid by means of an electronic declaration, which is submitted no later than the 17th of the following month.
  • Issue a digital tax document via the Internet (CFDI) for withholding taxes and payment information to every natural person to whom the withholding tax was levied no later than 5 days after the month in which the withholding tax was levied.
  • If the recipient of the service so requests, they must electronically issue and send the electronic files in PDF format containing the supporting documents corresponding to the payment of the consideration, expressly and separately indicating the VAT.
  • They will provide information on a monthly basis about the operations performed by their broker, regardless of whether they are processing payments.