What is an RFC in Mexico?
The RFC is a distinct tax code that identifies each individual registered on the Federal Contributor Registry (Registro Federal de Contribuyentes – RFC). It is comparable to a social security number in the US, or National Insurance Number in the UK.
You can apply for your RFC in Mexico if you have a valid residency permit (either temporary or permanent).
The RFC is granted by Mexico’s tax collection agency, SAT.
What is the ‘SAT’ in Mexico: SAT (Servicio de Administracion Tributaria) is Mexico’s tax collection agency, comparable to the IRS in the US. Like the IRS, SAT has offices in all states around the country.
Types of RFC in Mexico
There are two primary types of Mexico RFC:
• Persona Física: this is for individuals, and is comparable to a US Social Security number. When an RFC belongs to an individual, it has 13 characters.
• Persona Moral: this is for registered companies, and is comparable to a company tax registration number. An RFC for registered companies features 12 characters.
What is the RFC used for?
• The RFC is needed to work or receive income in Mexico and therefore pay taxes.
• It is used to track business and commercial transactions, payments, and expenses for taxation reporting objectives.
• As of recently, some administrative processes in Mexico now require an RFC for the applicable paperwork.
• Individuals can also use their RFC to claim specific tax rebates that their employers do not handle, for instance, some medical expenses.
If you don’t have an RFC, you cannot claim capital gains tax exemptions on any property you own when you sell it, for example, if you own a home in Mexico, you will require an RFC to claim capital gains tax deductions when you sell it.
The RFC is quite mandatory, even if you are not a taxpayer, you will still need to apply for your Mexico RFC if you are a resident or citizen over the age of 18.
The CURP in relation to RFC
The CURP stands for “Clave Única de Registro de Población” and is different from the RFC. When you are granted Mexican legal residency, you are automatically assigned a CURP.
The CURP is very useful because it is among the required documents when you attend the SAT office to register for your Mexico RFC.
What is a Factura, and how does it relate to the RFC
A factura is like a receipt you get when you pay for any goods or services in Mexico.
A Factura is related with the seller’s and buyer’s RFC.
All institutions in Mexico can issue a factura when you ask for it. When you ask for a factura, you are safeguarding yourself against additional charges for services or products you did not request or are not aware of.
When you ask for a Factura the seller request ask you for your RFC. Facturas are requested and allocated through the SAT’s online system.
How to apply for an RFC in Mexico
To obtain your unique RFC, which will be linked to you permanently, you must apply for it through the SAT. You have to attend your local SAT office in person in order to apply. SAT only receives applications by prior appointment, so you have to request your appointment online.
To begin with the process, you must have your CURP and the following documents:
• Valid passport
• Valid Mexico residency card
• proof of address
Once you have prepared the above-mentioned documents, you can then apply for your RFC at the SAT.
Once you have acquired your RFC, you will then be able to request your Tax Status Certificate (Constancia de Situacion Fiscal), which comprises data on your identity, location, and fiscal duties as a taxpayer. This document is only borrowed when you plan to create a factura for the purpose of making deductions to your taxes.
As stated above, the RFC in Mexico is used for tax purposes for businesses and individuals, so every company and basically all Mexican residents require one.
If you are looking to start a business in Mexico, and you needed help with the process and the formalities attached to it, such as getting your RFC, let’s go ahead and contact your Damalion expert now.
