Mexican Income Tax--25% applied to Independent Contractors
Thread poster: Patricia Rosas

Patricia Rosas  Identity Verified
United States
Local time: 18:14
Spanish to English
+ ...
Apr 28, 2004

Has anyone else who works for Mexican clients had this experience? My client recently began deducting 25% from all my invoices to comply with an amendment to the Mexican Ley de Impuesto sobre La Renta implemented on 12/31/03. The law applies to: "Los residentes en el extranjero, respecto de los ingresos procedentes de fuentes de riqueza situadas en territorio nacional, cuando no tengan un establecimiento permanente en el país..."

I'm troubled not just because I'm losing money but because I'm required to sign a form that says that the work was "desarrollado en la instalaciones" of the institution when, in fact, I performed all the work here in my home in Tucson.

I'd like to know if I should try to investigate this further or whether I should just accept it? If no one else is being taxed this way, I'd like to know why...
Thanks for your help!

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Elías Sauza  Identity Verified
Local time: 19:14
Member (2002)
English to Spanish
+ ...
Tax Agreements Apr 28, 2004

Mexico and the US have a tax agreement whose purpose is to prevent doble payment of taxes for people who work for international companies while living in their own country. You should ask the Mexican agency to send you a format in which you will state that you are a US tax payer so this agency does not deduct any taxes from your work. (FYI the US format is called W-8BEN.)

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Mexican Income Tax--25% applied to Independent Contractors

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