Mexico Tax Regimen de Incorporacion Fiscal – RIF – English

 

As of January 1, 2014 tax law in Mexco has changed substantially. The government issued a presentation to explain the system to what used to be called small contributors. Following is a translation of that presentation with additional explanation in double brackets like this:((additional comment)).

Because people learn in different ways there are two other versions of the same information. The presentation in Spanish with some inline translation is located on this page: RIF Tax Presentation in Spanish with translation. The Spanish only version is here: RIF Tax Presentation in Spanish

Most Important things to know:

The small contributor system (REPECOS) has been replaced as of January 1, 2014.

You have to get an RFC tax registration number unless you already have that.

You have to make your first report by the end of March.

If you do business of any kind you better register because the new system is designed to find those who are not paying taxes.

The system is being phased in over a ten year period.

Payments of more than 2,000 pesos cannot be made in cash. (i.e. must be made by credit card, bank transfer or cheque)

RIF – Regimen de Incorporacion Fiscal

Sunject: ((i.e. To whom does RIF apply))

Individuals who only carry out business activities, (ie selling goods or services) for which no professional qualification is required, provided that their incomes do not exceed two million pesos.

NOTE: Small contributors will be incorporated automatically. ((i.e. your registration will be moved to the RIF data base if you were previously registered as a small contributor. (REPECOS)))

Characteristics of a RIF user or business

They will record their income and expenses using the on line system called “Mis Cuentas”.

They will send invoices (facturas) to their clients using the on line system.

They pay no taxes in the first year (including ISR, IVA and IEPS), except where factures were issued. All payments and taxes withheld from employees still have to be paid.

Declare every two months (March, May, July, September, November and January of the following year). In the first year you only have to declare your data without paying federal taxes.

If you live in rural areas without Internet access you can submit the statement in one of the following ways:

— Going to the Local Taxpayer Services Administration.

— In the Federal State, when you have authorization. We take this to mean at some state office?? but not sure.

— By telephone to InfoSAt (coming soon)

Benefits:

During the first year no tax is payable. i.e. the tax is reduced by 100% of what would be payable. The table in the presentation shows that for each following year that reduction is 10% less. To say that another way you will pay zero federal tax in the first year 10% of the normal rate in the second and so on.

IVA (VAT) fiscal stimulus.

100% VAT which would be payable for:
• Sale of goods
• Provision of independent services
• Granting the use or enjoyment of personal property
such tax will not be charged or credited, ie, only operations are conducted with the general public.
(( a bit confusing but I think this is just a statement that by not charging these taxes economic stimulus will result. Hence it is listed under the heading benefits.))

IEPS stimulus.

100% IEPS tax which would be payable for:
• Sale of goods
• Provision of services
such tax will not be charged or credited, ie, only operations are conducted with the general public.

Facilities

i.e. service the RIF system provides

• The Tax System “Mis Cuentas” in which they record their income and expenses, allowing them to serve already entered information which will be used for filing your bi-monthly declaration.
• They are not obliged to file annual statements or information returns, except the withholding of wages.

Main Obligations:

• Enroll in the RFC. i.e you have to get a federal tax registration number called an RFC
• Record revenues and expenses in the Fiscal System Registry “Mis Cuentas”, within two months.
• Deliver sales note when your customers do not require facturas (invoices).
• Invoice your clients if they request facturas, using the Fiscal System Registry “Mis Cuentas”. In the “Easy Invoice”. ((I.e. you enter the factura into the system and the RFC number links it to his account. Similarly folks from whom you need an invoice can enter them into the system and it gets attached to your account by your RFC. That is what is meant by electronic invoices. Pretty slick really.))
• Submit bimonthly statements, including retentions. ((not sure what retentions are but I assume they have to do with employee hold backs))

Businesses or persons cannot apply this scheme who obtain income from:

• AS partners or shareholders or members of a legal entity ((e.g. incorporated business)).
• Commission, mediation (unless your income for these items does not exceed 30% of the total), agency, representation, brokerage, consignment and distribution.
• Activities through trusts or joint venture.
• Activities related to real estate, real estate capital, real estate and financial activities (except when demonstrating or promoting these((not sure what demonstrating and promoting means in this context))).
• Entertainment franchisees.

Examples

The presentation then moves to some concrete examples with these lead in comments:

“Mis Cuentas” is mandatory for Fiscal Regime Incorporation (RIF). Through this system you must:
• Issue and view electronic invoices.
• Capture your income and expenses, as well as consultation.

The information generated by the records will be used for integration and presentation of their evidence.

To get into the system “Mis Cuentas” you enter the RFC and password.

((The presentation shows the following examples of how to enter some data including an electronic invoice))

SAT header
RIF  tax Example 1

RIF  tax Example 2

RIF  tax Example 3

RIF  tax Example 4

RIF  tax Example 5

RIF  tax Example 6-1

RIF  tax Example 6-2

RIF  tax Example 7-1

RIF  tax Example 7-2

How to record your income and expenses.

In “My Account” shall record the income and expenses generated by its activities, also consult these records.

1.Entering income.

• When you issue an electronic invoice to your customers, revenues will be logged in automatically, so that they may see it in “Easy Invoice”;
• You must not issue a comprehensive invoice with “Easy Invoice” (( not sure what a factura global is but have translated it as Comprehensive invoice))
• In this section you must enter income for which invoices were not issued (for sale to the general public), either on a daily, weekly, monthly or bimonthly basis.

((then the presentation gives examples of how to do that))

SAT header
RIF  tax Example entering income 1

RIF  tax Example entering income 2

RIF  tax Example entering income 3

RIF  tax Example entering income 4

RIF  tax Example entering income 5

2. Entering Expenses
This section you must enter only those expenses that you did not receive invoices for.((translation incomplete here because also excluded is paperwork with bar codes or CFD and not sure what that means))

((The reason you must not enter invoices is that any invoices will be entered by the entity from whom you purchased goods and services and connected to your account by your RFC))

((The presentation then gives these examples:))

SAT header
RIF  tax Example entering expenses 1

RIF  tax Example entering expenses 2

RIF  tax Example entering expenses 3

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