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signing forms for tax withheld in Mexico
Thread poster: Patricia Rosas

Patricia Rosas  Identity Verified
United States
Local time: 09:10
Spanish to English
+ ...
Jan 19, 2007

About 2 years ago, I went through this same hassle, and now it's starting again. I've worked for 6 or 7 years for a university in Mexico. I bill them in US$. They have just sent me a form to sign with that reads:

Importe Bruto $4000
Retención 25%$1000
Neto $5000

The amounts are in Mexican Pesos. I invoiced in US $ and was paid in US$ and no withholding was taken out.

Previously, I prevailed (after finding a copy of the tax law) in my argument that I was not subject to this tax.

I'm really frightened about signing a form that isn't accurate. Has anyone encountered this situation?


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GLENN MCBRIDE WITHENSHAW
Mexico
Local time: 10:10
Spanish to English
+ ...
I have a business in Mexico and I sell and pay for services outside the country Jan 19, 2007

I have a Mexican corporation and I make sales and pay for services outside the country.

In Mexico we must charge the IVA that corresponds for sales and services, also a corporation or association (persona moral) that does business with an individual (persona fisica) must withold income tax and IVA when paying them.

The exception is this: When the sale or service is outside the national territory, you don't have to charge IVA. If you are paying for services outside the national territory, you do not have to invoice them with a "factura oficial" (in Mexico all of our invoices are registered by number with Hacienda - in order to give someone an invoice you must obtain their "datos fiscales" (address and RFC).

If they are outside the country you can prepare an invoice with their name and address outside the country and write on it "Venta al Exterior" and not charge them IVA.

If you want to pay someone for services outside the country, you can do it the same way. YOU must send you an orginal copy signed by you (not electronic) and write on it a legend like "prestación de servicios en el exterior". They don't have to pay IVA on it or retain ISR, but you have to have a written contract with them that mentions that you are performing these services "en el exterior".

I do this all the time: my accountant did some research on it several years ago to make sure I would not have problems with Hacienda.

My web site is www.mexicanlaws.com
Regards
Glenn McBride
glenn@mexicanlaws.net

[Subject edited by staff or moderator 2007-01-19 22:22]


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Patricia Rosas  Identity Verified
United States
Local time: 09:10
Spanish to English
+ ...
TOPIC STARTER
that is so helpful!! Jan 19, 2007

Thank you ... mil gracias ...

This is exactly what I understood the law to say when I studied the situation a few years ago. However, I didn't know that I needed to write on the invoice that the services were performed outside of national territory. I will start doing that from now on. It is rather obvious since I live in the US and have not set foot in the university in years.

Truly, thank you for taking your time to explain this. I plan to share it with my clients!


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signing forms for tax withheld in Mexico

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