Important: New tax requirements for sellers in Mexico

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Making sure we keep you informed on important updates and support you through changes that affect Etsy’s marketplace is our top priority. That’s why we’re writing to let you know about a key tax change that may impact your shop. Starting Jan 1, 2023,  to comply with local laws, Etsy will start withholding taxes from the sales of sellers in Mexico to cover impuesto sobre la renta (ISR) and impuesto al valor agregado (IVA). These funds will then go to the Servicio de Administración Tributaria (SAT). 

The amount Etsy is required to withhold can be as high as 36% of the order total, however if you register for a Registro Federal de Contribuyentes (RFC) identification number and add it to your Etsy account, significantly less tax (see more below) will be withheld from your Etsy sales. 

You can add your RFC ID to your account in the Finances section of your Shop Manager: https://www.etsy.com/your/account/taxpayerid

If you have a business RFC ID on file, nothing will be withheld from your sales, in accordance with local tax regulations. 

If you have an individual RFC ID on file with Etsy, we’ll only withhold: 

• 1% for income tax on any order you receive
• An additional 8% for IVA on sales to buyers in Mexico

It takes time to register for a RFC ID so consider registering for a RFC ID number soon so that the minimum amount is withheld from your sales. We’re sure some of you might have some questions, so we’ve compiled a list of common FAQs to help guide you through this requirement.

FAQs

Why are you withholding taxes from my sales?

This tax change is due to a Mexican tax legislation that passed over the past few years. We’re starting to withhold taxes from your Etsy sales starting January 1, 2023. You will only see these withholdings taken from your sales from January 1, 2023 and forward.

What is an RFC ID?

An RFC ID is a unique tax code which identifies each person registered on the Registro Federal de Contribuyentes. This official Mexican tax registry is for any citizen or temporary or permanent resident in the country that intends to do business or receive income in Mexico and therefore must pay taxes. As a shop owner, you must apply for this RFC ID, and it is not the same as your CURP (Clave Única de Registro de Población), which is automatically issued to all citizens and residents. Please note that individual RFC IDs are 13 digits long, and are made up of 4 letters followed by 6 digits and 3 alphanumeric characters. Business RFC IDs are 12 digits long, and are  made up of 3 letters followed by 6 digits and 3 alphanumeric characters

How do I get an RFC ID?

If you do not have an RFC ID, you must apply for it via the Mexican government’s tax agency, Servicio de Administración Tributaria (SAT). Here’s how to apply:

• Go to https://citas.sat.gob.mx/datosPersonales
• Then, select Inscripción al padrón de contribuyentes Personas Físicas and begin the process to set up an appointment with SAT to receive an RFC ID. 

Please keep in mind that it can take quite some time to obtain a RFC ID, so we recommend starting this process early to ensure you can provide us with your RFC before we start withholding from January 2023.

How will the amount withheld be reflected in my Payment account?

For any eligible sales, you will see a line item in your recent activities for the amount of taxes withheld. You’ll also see the withholding tax categories in your activity summary on your payment account.

How will I be able to confirm the amounts that are withheld?

For any eligible sales, you will see a line item in your recent activities for the amount of taxes withheld. If you have an RFC ID on file, you will also receive a certificate for withheld tax (CFDI) sent to your Etsy email each month. Please note a CFDI can only be provided for months where you have your RFC ID on file. Your CFDIs should also be available for you to view in the SAT Web Portal.

How does this impact my income tax (ISR) and VAT (IVA) requirements in Mexico?

When you have an RFC ID on file, any amounts that are collected will be remitted to the Mexican tax authorities and should show in your SAT online account as a credit towards your taxes.

Why can the withholding amount be as high as 36% of the order total?

This is because the income tax on all sales can be up to 20% and then there is an additional tax of 16% on domestic orders if you have not provided Etsy with your RFC ID. 

How do I make sure my email address is up-to-date so I get the CFDI certificate?

To review or change the email address on your Etsy account. Please do the following:

1. On Etsy.com, go to Your account and then select Account settings.
2. Scroll down to the Email section to view or change your email

You can also head to Etsy’s Help Center and read this article for more info. 

What if I add an RFC ID after January 1, 2023?

Any changes to the RFC ID on file with Etsy will affect your withholding amounts for the month in which you make the update, and onwards. For example, if you previously did not have an RFC ID on file, and then added an individual RFC ID to your Etsy account on February 10, 2023, then starting Feb 10, any new orders will have only up to 9% withheld.

• Also, any withheld amounts for orders made earlier in Feb before this update will also be credited to reflect the new withholding amounts of up to 9% instead of withholding amounts up to 36%.
• Any amounts withheld in January are locked as they have already been reported to the Mexican tax authorities.

So make sure you get a head start on adding this information to your Etsy account, or getting an RFC ID if you don’t have one yet.