When obtaining a Mexican tax number RFC for the first time from the Office of the Tax Administration (SAT), many foreign citizens receive tax treatment «Sin Obligaciones Fiscales» («no tax liability»). In a typical situation, the SAT office worker looks at the resident card and asks standard questions: Do you work in Mexico? Are you receiving income? If the resident card does not indicate a work permit, or if the answers are «no» or «I do not plan to acquire income in Mexican territory» the resident is assigned this particular regime. Sometimes a resident chooses this regime deliberately, believing that this will exempt him from taxes. But this is a misconception: the regime «Sin Obligaciones Fiscales» does not exempt from obligations based on actual income.
Mode «Sin Obligaciones Fiscales» (or 616, according to SAT classification) is intended for adults who do not receive a salary and do not conduct economic activity in Mexican territory. Under this regime, there are no obligations to file income tax returns (ISR) and VAT (IVA), or to make advance payments.
However, the tax regime «Sin Obligaciones Fiscales» does not cancel the general tax rules:
- ISR: according to art. 1 of the ISR Law, Mexican residents are required to pay tax on all income, regardless of source.
- IVA: 16% tax applies if services or works are performed for a customer in Mexico (Articles 1 and 14 of the IVA Law). When providing services to a foreign client outside the country, a 0% rate is applied (Article 29 of the Law).
Mode «Sin Obligaciones Fiscales» Only valid if there is no traceable income. Regular deposits into Mexican accounts automatically qualify as taxable, creating a «discrepancia fiscal». Simply put, if the SAT sees that money is regularly deposited into your account, but you do not file returns or indicate less than the amount you actually received, a «discrepancia» — discrepancy between reality and your declarations. Even if the regime is not formally changed, SAT considers such income as a tax liability.
In other publications, we wrote that if you receive money in your Mexican account, try to make transfers to yourself (the names of the sender and recipient are the same) or marked «apoyo economico» (economic support). However, even then it is your responsibility to prove to the SAT that these receipts — not the result of commercial activity.
SAT has the ability to track earnings in a variety of ways. Banks submit monthly reports to SAT on the movement of funds over MXN 15,000, including «suspicious» translations. Data on card expenses is compared with declarations. If discrepancies are identified, a carta invitación is formed, in other words, an invitation to an interview to explain the source of income. Failure to timely explain the origin of income or failure to change the regime leads to additional taxes and fines.
What is important here is the position of a particular bank, which has the right to act on its own initiative, and not at the direction of SAT. If the bank suspects that you receive income from business activities, but you have provided them with proof of tax status with Sin Obligaciones Fiscales, it is easier for the bank to block your account and refuse further service than to deal with the source of your income.
Fines for failure to file ISR and IVA returns can amount to 1400 — 17370 MXN per month + penalties for late change of tax regime — 4810-11600 MXN. At the same time, the lack of checks has the right to create the illusion of «security». SAT doesn't really have the resources to do blanket audits, but the IRS has the power to open an audit of the last five years at any time. Moreover, if SAT detects a violation at the very beginning of this five-year period, the maximum depth of the inspection may reach ten years.
If you do have traceable income in Mexico, it is recommended that you change your tax regime «Sin Obligaciones Fiscales» on the corresponding actual activities, file returns and start paying taxes. Failure to comply with these requirements can have consequences, including the accrual of taxes for past periods, penalties and fines, the initiation of administrative collection processes, blocking and seizure of accounts and further refusal of banks to service, blocking the prospect of legally conducting commercial activities, etc. In exceptional cases, criminal liability may arise.
Mode «Sin Obligaciones Fiscales» protects only those who actually do not receive income. When actual receipts are received into Mexican accounts, the tax office considers them taxable, creates a loan and applies penalties. Ignorance of the regime and tax evasion — game with the risk of blocking accounts, loss of property and restrictions on activities in Mexico.