The 2022 tax reform included a change to Article 27 in the Federal Fiscal Code where they added a paragraph stating that all individuals of legal age (legal age in Mexico is 18 years old) are to get an RFC number regardless of whether they are employed or have a business activity. The reason behind this, as well as the reason behind the change that made it so that RFCs could no longer be issued online but now require an in-person appointment, is that over the years, fiscal identity theft was very common and very easy to accomplish. This is because CURP numbers are basically public: if you know a person’s full name and date and place of birth, you can very easily get their CURP number. This type of identity theft has been mainly used by money laundering and illegal outsourcing and facture selling organizations. This is also why SAT changed the process for obtaining a password to be able to access their online services two years ago so that they can make sure it is the taxpayer the one who applies for and sets the password.
Contrary to information that has been circulating around the internet and social media, this went into effect on January 1st. On January 3rd, SAT issued a press release which can be found here stating that there would be
no penalties for individuals who were unemployed or had no business activities and who did not register for an RFC number. This is partly due to the fact that, given the current in-person only RFC registration system, it will take some time for SAT to be able to physically register everyone; on the other hand; the president also spoke on the matter making it clear that the intention behind this reform was not to penalize people but to come up with a better, complete database, and to protect individuals’ from fiscal identity theft.
What about foreigners?
This is a topic that has a few angles to it which I will attempt to explain in as much detail as possible in layman’s terms: First of all, the fact that a foreigner is a resident because Immigration granted them residency does not automatically make them tax residents, it means that they are allowed to be in the country for more than 183 per year. The Federal Tax Code states that an individual can be considered a resident for tax purposes when their residence (referring to houses, condos, RVs, etc.) is in the country. If they also have a place in another country, then what determines tax residency is the center of vital interests which is defined as the place where someone gets more than 50% of their income. Most expats also have a place abroad and do not have any Mexican-sourced income or, if they do, it is less than 50% of their total income. If they do have Mexican-sourced income, then they are to pay income tax to Mexico on that income alone because they are not considered to be Mexico tax residents. When Immigration Law was reformed several years ago, they went from issuing FM2, FM3, etc. to issuing temporary and permanent resident cards. This caused several tax issues to arise as both the Federal Tax Code and all our specific tax laws simply refer to residents. This is where looking at who the Federal Tax Code considers to be a tax resident became even more important than before.
On the other hand, most foreigners obtain their residency by showing enough solvency, which means they prove they have no need to earn income in the country. This is where a main difference between temporary and permanent residents becomes evident as permanent residents automatically have permission to work from Immigration (Immigration considers earning any type of income in the country as work, not just being employed), but temporary residents—unless they get their residency via job offer—do not automatically have permission to work.
When someone starts a business activity in the country such as earning rental income or setting a business up, they must inform Immigration that the conditions under which their residency was initially granted have changed and apply for permission to work. In this case, Immigration’s first requirement is to show their RFC registration stating the activity they have which resulted in the change in conditions.
So what’s with July 1st?
The only thing that fully goes into effect on July 1st is the transition from version 3.3 of electronic invoices (CFID: Comprobante Fiscal Digital por Internet, Fiscal which roughly translates as “Fiscal Receipt Issued on the Internet”, meaning electronic invoices commonly referred to as “facturas” which literally means “invoice”)A Constancia de situación fiscal is an RFC certificate that includes the taxpayer’s general information as well as information on their tax regime and tax obligations on the date it was issued. Because the tax regime and address can change if the taxpayer needs to change them, vendors and suppliers request updated versions of the constancia, which usually simply translates into recently issued Constancias. If you already have an RFC number and have registered it with utility companies such as CFE, Telmex, SEAPAL, etc., you should already have received a request from them to update your tax information son they can continue to issue facturas with your RFC number after July1st. If your utilities are in your name but you do not have an RFC number, all utility companies have been and will continue to issue facturas using the generic RFC number for the general public (XAXX010101000), as these companies do not normally use the generic RFC number for foreigners (XEXX010101000) by default like some banks, such as Intercam, do. You can verify this on your bills/bank statements. If you want to put utilities in your name and do not have an RFC number, they will simply use the generic RFC number. If you do have an RFC number, they will ask that you provide them with a Constancia de Situación Fiscal so they can make sure the information they input into their systems matches SAT’s. It is important to clarify that all banks and utility companies have been requesting constancias for a few years, it just became more important with CFDI 4.0 because, as explained above, if the name, zip code, and tax regime do not match SAT’s file on the recipient, the facture will not be issued as SAT’s servers will automatically reject it.
