A few years ago, it was brought to our attention that when temporary residents with no work permit went to Puerto Vallarta’s SAT office to get their electronic signature files, said office had started to reject their IDs on the grounds that they were not allowed to have an economic activity. This was the case even for people who had been signed up with no obligations and who, for example, needed the electronic signature to get registered as employers with IMSS so they could pay social security on building their houses. No matter what the explanation was as to why they needed it, their IDs would get rejected.
As explained in this post, in late 2021 the registration process went from being done online to having to be done in person and by appointment only in a government attempt to protect taxpayers from fiscal identity theft. This created a real problem at the Puerto Vallarta SAT office as well as at any other that might have the criteria of rejecting temporary resident cards as IDs.
It is important to note that the Fiscal Miscellaneous Resolution (Resolución Miscelánea Fiscal) which is an official document issued by SAT every year and amended several times per year and which establishes operating tax rules, has a definitions chapter which, among other things, defines what documents are accepted as official IDs in section 1.2, sub-section A of Annex 1-A, which reads as follows (please note that points 1-5 are only applicable to Mexican citizens):
Official identification, any of the following:
- Valid voter’s card, issued by the National Electoral Institute (formerly the Federal Electoral Institute)
- Valid passport. (This does not apply to foreigners, see point number 6)
- Valid professional license with picture. With the exception of electronic professional licenses.
- In the case of minors, card issued by Public or Private Education Institutions, with a registration for officially valid study, or valid Personal Identity Document issued by the Population National Registry from the Secretary of Government.
- Valid card issued by the National Institute for Eldery People (INAPAM, does not apply to foreigners, see point number 6)
- In the case of foreigners, valid correspoding migratory document issued by the competent authority (if applicable, migratory extension or renewal)
If you want to read the Fiscal Miscellaneous Resolution, you can find it here; you can also visit this section of SAT’s website with the IDs definition excerpt from Annex 1-A.
In terms of migratory documents, the National Immigration Institute issues three of these:
- Permanent residency card
- Temporary residency card
- Temporary residency with a work permit card
As you can see, none of SAT’s official regulations state that only permanent resident cards or temporary resident cards with a work permit are accepted as a means of identification for foreigners. On the other hand, on Immigration’s side, the first requirement for the work permit application is the RFC registration as that is prove that the conditions under which the temporary residency was approved have changed because temporary residency is granted by proving solvency. The RFC registration proves to Immigration that the applicant now has an economic activity in the country and, therefore, requires a work permit to be allowed to earn income in Mexico.
When the RFC registration process went from being done online to being done in person and people started to get rejected by the Puerto Vallarta SAT office, our Immigration partner, attorney María Lazareno with KL México, approached the Immigration delegate to try and find a solution. The agreement they came to is that Immigration would process the work permit applications with an RFC pre-registration form, as opposed to the actual RFC number, as long as applicants committed to completing their files with the RFC registration notice as soon as it was finalized. This flexibility then became available to all applicants. Unfortunately, some people failed to turn in the RFC registration after being granted their work permits. Given this situation, the Puerto Vallarta Immigration delegate approached other Immigration offices and they all confirmed they were receiving RFC registrations and not pre-registration forms with people’s applications because other SAT offices do accept temporary resident cards with no work permit as valid IDs. Because of this and considering the fact that granting work permits with incomplete files is a violation of Immigration Law, the Puerto Vallarta Immigration office is now not accepting RFC pre-registration forms.
KL México and Equilibrium approached the Immigration delegate on June 2nd to try and work out a solution while we manage to get SAT to homologate the ID criteria at the Puerto Vallarta SAT office; what he offered was for us to file an official request for temporary flexibility which he can present to his superiors in Mexico City. This has not been answered yet, so, for the time being, the Puerto Vallarta Immigration office will not be processing those applications. JUNE 7TH UPDATE: Due to more complications regarding the expiration date on work permit and the timeframe for RFC registrations, our request for flexibility has been turned down so the Puerto Vallarta Immigration office will strictly apply their law and will not be granting work permits unless the application includes the RFC registration.
Regarding SAT, at Equilibrium we are looking for actual cases of people who have been rejected at the Puerto Vallarta SAT office for not having a work permit so that we can request SAT’s Mexico City offices to get the Puerto Vallarta office to comply with Section 1.2, sub-section A, numeral 6 of Annex 1-A of the Fiscal Miscellaneous Resolution. If you are in this situation and would be willing to aid our efforts, feel free to contact us here.
We will be updating this post as we manage to make some progress with either SAT or Immigration.
New process for getting an RFC number
For many years, getting registered for an RFC (tax ID) number was a process done online using the taxpayer’s CURP number; however, due to identity theft prevention issues, the process has changed and it now has to be done in person at SAT’s offices, by appointment only.
Getting an appointment
SAT has also changed their appointment system which used to be as simple as entering the taxpayer’s information, the office of their choice and choosing a day and time for the appointment, while allowing to switch between offices without having to start the process over. The way the new appointment system works is the following:
- Email addresses can only be used once (at Equilibrium, we have been using Apple’s “Hide my email” feature to generate different addresses linked to ours’ to overcome this)
- After inputting the taxpayer’s name, CURP number, and email address, a token number is sent to the registered email and it is needed to be able to see the calendar.
- An office is selected, if there is appointment availability, a time and date are chosen and an confirmation email is automatically sent.
- If there is no availability, the system gives the user the option to add the appointment request to their “virtual queue”, if the option is declined, the process needs to be restarted to be able to see availability at other offices.
- When the virtual queue option is accepted, the taxpayer is virtually in line for an appointment and, when there is an opening, an email is automatically sent stating the time and date that have been assigned by the system. The only options then are to go back to the queue (this option is only available once) or to accept whatever time and date was automatically given. If the appointment is accepted by the taxpayer, they need to confirm on SAT’s website within 24 hours of receiving the appointment’s confirmation. This requires a very similar process involving a token number that is sent to the registered email address.
- While on the virtual queue, the taxpayer can see where they stand in line; this, again requires a token number sent to the email and the system will display they are X out of X people in line.
If you want to get an appointment, you can click here to go to SAT’s appointment online system.
Temporary residents
This change has also resulted in a new issue for temporary residents. In the past, people would get their RFC number online and then use their registration documents to apply for permission to work with Immigration. It is important to remember that Immigration considers earning any type of income as work, and so temporary residents need to be allowed to work in the country. This is not an issue for permantent residents as that type of residency automatically includes permission to work and Immigration only needs to be notified of the change in the conditions under which residency was first granted.
The current problem is:
- Immigration’s first requirement to be able to apply for permission to work when the applicant does not have a job offer from a Mexican employer is the RFC registration’s documents.
- Some SAT offices do not accept temporary resident cards as official IDs when they do not show permission to work granted by Immigration. This has been the case at the Puerto Vallarta office for a few years now and it is also seems to be the criteria at other offices.
This creates a loop that has been successfully resolved by our Immigration attorney partner by doing a pre-registration process with SAT for which the applicant gets an official receipt issued by SAT and then making a case to Immigration that the RFC application has been started and will be completed upon approval of the permission to work which gets granted subject to delivering the actual RFC registration’s paperwork as soon as the process is completed. IMPORTANT UPDATE: THE PUERTO VALLARTA IMMIGRATION OFFICE HAS CHANGED THEIR FLEXIBILITY CRITERIA, YOU CAN FIND MORE INFORMATION HERE
If you want to contact our Immigration attorney, María Lazareno, you can email her directly by clicking here, or by emailing her at maria@klmexico.com
If you want to discuss the process for getting an RFC number, you can book an initial consultation by clicking here.
RFC registration obligation
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 factura 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 basically 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. The vast majority of 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 a 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 have to 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. This used to be really easy back when the RFC registration process was done online; since that changed, the main challenge has been that some SAT offices, such as the Puerto Vallarta office, have a criteria of not accepting temporary resident cards with no permission to work as a valid ID. When questioned about this, their response is always that they are not refusing to process the RFC registration, they are rejecting the ID.
It is important to note two things: SAT does not consider foreign passports to be valid IDs and there is nothing on any public SAT regulations that state that only permanent resident cards and/or temporary resident cards with permission to work are allowed. The official documentation on this only says “Valid migratory document issued by the corresponding authorities” as you can see here. However, this criteria of not accepting resident cars with no permission to work is not exclusive to the Puerto Vallarta office.
This has created a loop we have been successfully able to navigate, you can find more details on this here. IMPORTANT UPDATE: THE PUERTO VALLARTA IMMIGRATION OFFICE HAS CHANGED THEIR FLEXIBILITY POLICY, YOU CAN FIND MORE INFORMATION HERE
Because the Federal Tax Code is quite vague in stating that all “individuals” of legal age now have an obligation to register for an RFC number and the situations explained above make this a more complex topic for foreigners, at Equilibrium we have filed an official inquiry with SAT pointing out the fact that several SAT offices around the country do not even accept temporary resident cards with no permission to work as IDs. As soon as we get an official answer from the authorities, we will post another blog entry explaining it.
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 (CFDI: 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”)
Version 4.0 of CFDIs will include a new field for the recipient’s fiscal regime and will also make the zip code field mandatory. These two new fields, along with the RFC and name fields will be automatically validated by SAT’s severs, which means that a factura will not be issued unless these four fields match SAT’s information on the recipient exactly. This is the reason why vendors and suppliers have been asking their clients to provide them with a Constancia de situación fiscal.
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.
Constancias de situación fiscal can be downloaded from SAT’s website with just the RFC number and password here. When this is done, they are dated the day they are downloaded and have a digital signature that guarantees its authenticity. They can also be obtained by showing up to SAT with a valid ID. This is the reason behind the long lines outside the SAT office every day. It is mostly employees who now need to show their employers their constancia so the employer can issue electronic pay slips.
CFDI 4.0 was supposed to go into effect on January 1st, along with all the other changes in the tax reform. However, because this type of change requires all factura issuing service providers to make changes to their systems, an extension to May 1st was published along with the tax reform. The transition from CFDI 3.3 to CFDI 4.0 has posed a bigger challenge than anticipated, so a second extension was published in February, pushing the date to July 1st. So, June 30th will be the last day anyone in the country will be able to issue CFDI 3.3, unless the authorities extend the deadline further.
If you already have an RFC number and have registered it with utility companies such as CFE, Telmex, Izzi, 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 July 1st. 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 factura will not be issued as SAT’s servers will automatically reject it.
You can find official information on CFDI 4.0 here. A lot of this information is probably too technical but you can also find some FAQs on the right side of the website which your browser should be able to translate into English.
If you have further questions on taxes and RFC registrations, you can send an email to pblanco@equilibrium.mx; if you want to book a call, you can do so here. If you have questions on Immigration matters, you can contact Lic. María Lazareno at maria@klmexico.com
Source: Paula Blanco
CPA, Master in Mexican Taxes
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