Mexican VAT registration

In Mexico, the requirement to register for value added tax (VAT), known locally as Impuesto al Valor Agregado (IVA), is not based on a turnover threshold. Instead, VAT registration is generally required when a business carries out taxable activities in Mexico, regardless of the level of revenue.

• Resident businesses must register for VAT if they carry out taxable supplies of goods or services in Mexico. There is no minimum turnover threshold under Mexican VAT law.
• Nonresident businesses may also be required to register for VAT if they make taxable supplies in Mexico. In particular, foreign suppliers of digital services to Mexican customers are generally required to register from the first taxable supply, even if they have no physical presence in Mexico.
• Mexico does not operate domestic or cross-border VAT simplification thresholds comparable to EU OSS/IOSS regimes. VAT obligations apply based on the nature of the supply and the location of the customer or transaction.

As a result, VAT registration in Mexico is commonly triggered immediately upon commencing taxable activities, rather than after exceeding a revenue threshold.

Foreign businesses may be required to register for Mexican VAT if they engage in the following activities:

• Selling goods in Mexico, including imports of goods where the foreign business acts as the importer of record
• Providing services in Mexico, including on-site services or services deemed supplied in Mexico under VAT place-of-supply rules
• Supplying digital or electronically delivered services to Mexican consumers (e.g., streaming, SaaS, online platforms, apps, or digital content)
• Operating a digital platform or marketplace that facilitates taxable supplies to Mexican users
• Holding inventory in Mexico for sale or distribution (e.g., in a warehouse or fulfilment centre)
• Running ecommerce operations that sell taxable goods or digital services to customers located in Mexico

Registration may also be required where a business makes zero-rated or exempt supplies if it also carries out standard-rated taxable activities.

To register for VAT in Mexico, resident and nonresident applicants typically need to provide:

• Completed VAT and federal taxpayer registration with the Mexican tax authorities
• Legal entity details: legal name, legal form, country of incorporation, registered address, and details of shareholders or legal representatives
• Mexican Tax Identification Number (RFC – Registro Federal de Contribuyentes)
• Description of business activities and expected taxable transactions in Mexico
• Contact details for the person responsible for Mexican tax compliance
• Digital certificates and electronic signature credentials required to interact with the SAT’s online systems
• Banking information for tax payments or refunds (where applicable)
• For nonresident applicants, documentation supporting the nature of the Mexican-facing activities (particularly for digital service providers)

Applications are submitted to the Servicio de Administración Tributaria (SAT) via its electronic registration systems. VAT registration must generally be completed before taxable supplies are made, as failure to register on time may result in penalties or blocked invoicing.

Structure: Mexican VAT registration is linked to the business’s RFC, which serves as the primary tax identifier. The RFC is typically 12 characters for legal entities and 13 characters for individuals, incorporating letters and numbers.

The RFC is used for VAT reporting, electronic invoicing (CFDI), and interactions with the SAT.

After registering for VAT in Mexico, businesses must comply with ongoing VAT obligations, including:

• Filing periodic VAT returns, generally on a monthly basis
• Charging and collecting VAT at the applicable Mexican rates (standard, zero-rated, or reduced where applicable)
• Issuing SAT-compliant electronic invoices (CFDI) for taxable supplies
• Maintaining accounting and VAT records in accordance with Mexican tax rules
• Submitting required electronic accounting and reporting files where applicable
• Paying VAT due by the statutory deadlines set by the SAT

Failure to comply with Mexican VAT obligations can result in penalties, interest charges, suspension of digital certificates, and enforcement action by the Mexican tax authorities.