Mexico Update: Issuance of the CFDI of Withholdings and Payment Information 2023

The tax provisions establish the obligation to issue a Digital Tax Receipt over the Internet (CFDI) of payments and withholdings in the cases indicated below, when taxpayers make payments to third parties that are subject to withholding of Income Tax (ISR), Value Added Tax (VAT) or Special Tax on Production and Services (IEPS). which, as a general rule, must be issued on the date on which the withholding payment is made.

For its part, Rule 2.7.5.4. of the Miscellaneous Tax Resolution establishes the option of issuing the aforementioned CFDI of withholdings and payment information on an annualized basis in the month of January of the year immediately following the year in which the withholding or payment was made, so that January 31, 2024 is the last day to issue said CFDI. It is important to consider that said CFDI must comply with the specifications of Annex 20 of the Miscellaneous Tax Resolution.

In accordance with the aforementioned rule, the CFDI of withholdings and payment information may be issued on an annualized basis in the following cases:

• issue CFDIs to the trustees or settlors, with the amount of income and withholdings derived from the business activities carried out through the trust. Article 13, second paragraph, of the Income Tax Law.
• Carrying out activities through passive trusts: issue CFDIs to the trustees or trustors, with the amount of the accruable income, authorized deductions and, where applicable, ISR withholdings, derived from the activities carried out through passive trusts. Rule 3.1.15., section I, last paragraph, of the Miscellaneous Tax Resolution.
• Payments abroad: issue CFDIs with the amount of payments that constitute income from a source of wealth in Mexico or payments made to permanent establishments abroad of credit institutions in the country; and with the corresponding withheld income tax. Article 76, section III; Article 86, section V; Article 110, section VIII, of the Income Tax Law.
• Dividend or profit payments: issue CFDIs with the amount of dividend or profit payments and the income tax withheld, as well as the specification of whether these come from the net tax income accounts or the net dividend account. Article 76, section XI, subsection b) of the Income Tax Law.
• Distribution of advances or returns: issue CFDIs with the amount of the advances and returns distributed and the income tax withheld, obtained by members of production cooperative societies, as well as civil societies and associations. Article 76, section XVIII, of the Income Tax Law.
• Rental trust income: issue CFDIs with the amount of the returns, provisional payments made and deductions, in the case of operations carried out by trusts by which the temporary use or enjoyment of real estate is granted. Article 117, last paragraph, of the Income Tax Law.
• Disposal of real estate: notaries, brokers, judges and other notaries must issue CFDIs stating the transaction, as well as the ISR and VAT withheld, in the case of transactions recorded in public deeds. Article 126, third paragraph; Article 127, third paragraph, of the Income Tax Law and Article 33, second paragraph of the VAT Law.
• Acquisition of assets: notaries, brokers, judges and other notaries must issue CFDIs stating the transaction, as well as the withheld income tax, in the case of transactions recorded in public deeds of taxpayers who obtain income from the acquisition of goods. Article 132, second paragraph, of the Income Tax Law.
• Payment of interest to individuals: Article 135 of the Income Tax Law.
• Payment of Prizes to individuals: issue CFDI with the amount of the payment for the prize and the ISR withheld. Article 139, section I, of the Income Tax Law.
• Payment of other income to individuals: issue CFDIs for payments made by legal entities to individuals, under the terms of Chapter IX Of the other Income obtained by Individuals, in which the transaction and the withheld income tax are recorded. Article 145, third and fourth paragraphs of the Income Tax Law.
• Payments to individuals of the RIF: issue CFDIs by the companies with majority state participation of the Federal Public Administration for the distribution of their products that correspond to the basic basket that exclusively benefits the beneficiaries of federal programs, carried out by individuals who are registered in the Tax Incorporation Regime. This CFDI must contain the amount of the operation that corresponds to the taxpayer of the RIF for the delivery of the good to the beneficiaries of the program, the amount of the cost of the goods that would have been acquired from the company with majority state participation and the tax withheld. Article Two, section XVI, third paragraph, of the “Decree amending, adding and repealing various provisions of the Income Tax Law, the Special Tax Law on Production and Services, the Federal Tax Code and the Federal Budget and Fiscal Responsibility Law”, published in the Official Gazette on November 18, 2015.
• Payments subject to VAT withholding: issue CFDIs for VAT withholdings made in the cases indicated in article 1-A of the VAT Law. Article 32, section V of the VAT Law.
• Payments subject to IEPS withholding: issue CFDIs for the IEPS withholdings that are made in accordance with article 5-A of the IEPS Law.

It is important to consider that the rule states that in those cases in which taxpayers issue a CFDI for income or for the performance of acts or activities, which already includes all the information on the tax withholdings made, taxpayers may choose to consider it as a tax record and proof of withholdings.

In this regard, it is important to review in which cases it is obligatory to issue the CFDI of payments and withholdings established by this rule, since in some of the cases listed above a CFDI containing the information of the operation is issued in accordance with what is indicated in the previous paragraph and in some other cases a CFDI is not issued for the operation. such as payments to foreign residents.

By Jáuregui y Del Valle, S.C., Mexico, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact mexico@transatlanticlaw.com

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