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Taxes for freelancers in Mexico

taxes for freelancers in mexico, tax fees for freelancer
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Team Crema  June 14th 2022

Meet your new best friend: the RESICO. For those who don't know what we are talking about, we explain it in this article. The RESICO, or Régimen Simplificado de Confianza, is under which freelancers can pay their taxes. Sounds awful, doesn't it? But we have good news for you. The Tax Administration Service (SAT) launched this regime so that freelancers can do their accounting and taxes in a simpler, but better yet, cheaper way. Usually working people in Mexico were registered under the tax regimes of Individuals with Business Activity and the Tax Incorporation Regime. RESICO was not created specifically for freelancers, but it turned out to be the ideal one since it is for anyone with an income of less than 3.5 million pesos per year.

A person in Mexico must pay two types of taxes: Value Added Tax (better known as IVA) and Income Tax (ISR). IVA is 16% in the center of the country and 8% in border states. But the ISR is where the magic is; an individual with business activity usually pays between 1.92% and 35%, but now, with RESICO the percentages vary between 1% and 2.5% depending on annual income. Incredible, isn't it? That's where paying taxes becomes not so horrible, but something lighter.

Taxpayers, or people registered under a tax regime, must make their tax return and the corresponding payment before the 17th of each month. In this case of the freelance, since the payments are usually for fees, that is to say without payroll, the tax returns must be monthly and annual. If these are not made in due time and form, the SAT can fine the person and, as if that were not enough, it keeps a tax credit equivalent to the amount owed plus updates and surcharges between 30% and 40% of such amount. If upon reviewing the annual tax return it is proven that you had more expenses than income, the government will automatically refund you if the amount is equal to or less than $150,000.00 pesos. This must happen in a term no longer than 15 business days.

If after reading this article it still sounds too complicated, we invite you to attend our second Talks by Crema in alliance with Konta. In this one Jose Salido will talk about everything that has to do with taxes and freelancers, a real dream. Click here to register and we will see you on June 22nd at 7:00 pm.

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