Everything you need to know about registering apps with the SAT

Black Box
·5-min read

In order to guarantee compliance with tax obligations for foreign technology platforms operating in Mexico , the government is contemplating blocking applications that do not register in the Federal Taxpayers Registry (RFC) , do not correctly withhold taxes or fail to report of its activities to the Tax Administration Service (SAT) .

This as part of a draft decree that modifies and adds various articles of the Income Tax (ISR) and Value Added Tax (VAT) laws, so that said legislation has a stricter control mechanism so that the digital service providers from other countries do not incur serious tax omissions.

The registration of these companies in the registry of taxpayers is mandatory; For this reason, the Ministry of Finance and Public Credit (SHCP) , through a decree in the Official Gazette of the Federation (DOF) has published updates to the list of companies that have already registered in the SAT, which add up to 35 to the cut of last August 31.

Likewise, the SAT enabled a microsite where these technological platforms can register and consult all the information on the new federal regulations.

For Victor Aguirre, a lawyer specialized in technology and startups , these proposals put the country as a world example in terms of tax collection, “in fact, Mexico has always been considered a model in the sense that it has implemented actions very quickly. of BEPS, which are fiscal policy suggestions. Years ago, I had already implemented transfer prices that are multinational issues ”.

Aguirre affirms that this new legislation adds an “even floor” for foreign and national digital companies, since equalizing the burden of tax obligations encourages competition and the development of innovation. "Previously there was unfair competition, but it was due to a lack of regulation, now national and foreign providers of digital services are already in equitable conditions."

It also points out that the Organization for Economic Cooperation and Development (OECD) has carried out various studies and schemes at a multinational level on how, for example, a company that is going to have benefits in Mexico strategically transfers these to a country that has a low tax rate and that's where you pay taxes. So the OECD has an action plan against the erosion of the tax base and the transfer of profits to address the challenges of the digital economy, taking into account two factors: that it is highly intangible and the importance that it has ”.

The bill even includes that for the OECD the digital economy "is becoming more and more the economy proper ... its business models present some key characteristics that are potentially relevant from a fiscal perspective".

The change in the legislation is necessary because “the law used to say that only the resident is taxed, and those provisions are from the last century and do not make sense in a world where now it is possible to think that someone who is going to give you a service is not in your country of origin ”, Aguirre points out.

Who pays taxes with this proposal?

Providers that provide services in Mexico for which a consideration is charged and are provided through applications or content in digital format over the Internet or another network. They may not even require human intervention; that is, they can be automated.

Such as:

  • Those for downloading or accessing images, movies, text, information, video, audio, music, games, including games of chance, other multimedia content, multiplayer environments, obtaining mobile tones, viewing online news, information about the traffic, weather forecasts and statistics; with the exception of downloading or accessing electronic books, newspapers and magazines.

  • Those that allow the intermediation between third parties that are suppliers of services or new goods and the applicants of these.

  • Online clubs and dating sites.

  • Those of distance learning or of tests or exercises.

Those who grant access through the Internet to associated audio and / or video multimedia content will be considered taxpayers, and the user who views or downloads the associated audio and / or video multimedia content will be obliged to collect and pay the tax.

This means that in each invoice users must be notified about the VAT charge for that service, and that invoice must be included in their tax return. Similarly, the service provider must notify the SAT of all these operations and pay the corresponding taxes.

How is the tax collected?

When the user's payment is made by debit, credit, departmental or prepaid card, the banking institutions and the issuers of said cards must collect the tax.

The collection will be made at the time the payment for the provision of the service is made, consisting of granting access through the Internet to associated audio and / or video multimedia content, and must be reported no later than the 17th of the month following the one in which it was performed.

What should companies do?

  • Register in the RFC and process your advanced electronic signature; if they are already registered, they must update their economic activities.

  • Appoint a legal representative before the SAT and provide an address in national territory for the purposes of notification and monitoring of compliance with tax obligations.

  • They must withhold VAT and ISR, as appropriate, from individuals, and deliver them to the SAT by electronic declaration that they will present no later than the 17th of the following month.

  • Make the payment of the corresponding VAT (16% to the considerations collected in the corresponding month) by means of an electronic declaration that they will present no later than the 17th of the following month.

  • Issue to each natural person to whom the withholding was made, an online digital tax receipt (CFDI) of Withholdings and payment information, no later than within 5 days following the month in which said withholding was made.

  • When the recipient of the service requests it, they must issue and send electronically the electronic files in PDF format that contain the receipts corresponding to the payment of the considerations, with VAT included expressly and separately.

  • They will provide monthly information on the operations carried out through their intermediation, regardless of whether they process payments.