Green Circle Says Cross Border] Attention Mexican Sellers! Random inspections have begun, be sure to cooperate with the investigation to avoid fines and store closures!

Mexican tax agency opens tax audits
With tax season and annual financial audits approaching, the tax authorities are beginning to investigate taxes again. Recently, a number of sellers have been receiving letters from the Mexican tax authorities requesting their cooperation and timely processing. This investigation is random, which means that every Mexican seller may be asked to cooperate with the investigation.
If a seller fails to submit the required data or submits insufficient or false data, they may face fines and other related penalties, or even the risk of having their store blocked.
 
What should I do if I receive a verification email from the IRS?
If you receive a verification email from the Mexican tax agency, K suggests that sellers handle it calmly. First of all, read the email carefully and make sure you know what data you need to provide and what the deadline is. Secondly, sellers need to actively cooperate with the Mexican tax agency by providing true data files for the corresponding month. If there are any errors or deficiencies in the data files, sellers are advised to complete them in a timely manner in order to avoid penalties and business risks in the future. Lastly, sellers should maintain good communication and cooperation with the Mexican tax authorities and respond to their inquiries and requests in a timely manner.
If you have not yet received the relevant letter, you need to pay attention to your compliance filing status. Sellers should regularly review their accounts and transaction records to ensure that all transactions are reported and taxed in accordance with the regulations. In addition, sellers should be aware of changes and updates to Mexico's tax policies and adjust their business strategies in a timely manner to ensure their compliance and business stability.
Mexican VAT Code RFC
Although registering for a Mexican RFC allows sellers to claim VAT against input taxes and income tax against costs, not all sellers need to register. According to local requirements, sellers who have a permanent address in Mexico, have warehouses, and sell within or outside of Mexico are required to apply for a Mexican tax ID and file tax returns on a regular basis as required.

On Amazon Mexico, if a seller does not upload a valid RFC tax ID, the platform will withhold and pay VAT and income tax on behalf of the seller at a rate of 36% of the total monthly sales volume (including 16% of VAT and 20% of income tax) and pay these taxes directly to the Mexican government, without refunding them to the seller.
Amazon will not withhold any income tax from registered business sellers (legal entities) who have registered and uploaded a valid RFC tax ID number; however, from time to time, Amazon will look at a number of indicators in the seller's sales account to determine the amount of tax that is due from the seller.
The Mexican Revenue Service conducts tax audits of cross-border businesses to prevent tax evasion by cross-border sellers. If cross-border sellers have been complying with tax compliance requirements, there is no need to worry too much.
It is important to note that on Amazon Mexico, do not use the Mexican RFC number provided by the freight forwarder. This is because the RFC number of the freight forwarder may be underneath the store account number of multiple different sellers, which increases the risk of account linkage. Although there is no clear documentation that an RFC number can cause an Amazon back-end account to be linked, there is still an account risk.
In addition, on the Amazon backend, sellers are required to upload an RFC number, and according to the official Amazon notification, the RFC number registration information must be consistent with the legal entity information on the Amazon account backend. Therefore, in order to avoid problems, sellers should make sure that the uploaded RFC number is the same as their legal entity information.

Now the Mexican RFC registration is at its peak, and the Mexican RFC is a tax representative system, each tax representative can only reserve a limited number of numbers, coupled with the system of the tax bureau "reservation number" quantity is not enough to meet the demand, which led to the registration of many sellers to apply for the time affected by varying degrees. Therefore, it is recommended that sellers who need to register begin the application process as soon as possible.
Green Circle Technology focuses on providing one-stop services for cross-border enterprises, professional accountants and lawyers team, specializing in providing sellers with global VAT & EPR, global trademarks, and overseas business registration and reporting cross-border compliance one-stop services, for each seller to escort the sea. If you still have questions about Mexico RFC registration, please feel free to contact us.