Mexicos RFC Tax Benefits for Ecommerce Sellers Explained

This article provides a detailed explanation of the importance of the Mexican RFC (Federal Taxpayer Registry Number) for cross-border e-commerce sellers, especially those selling on Amazon Mexico. By registering for an RFC, sellers can avoid a 20% income tax withholding and potentially deduct input taxes, reducing their overall tax burden. The article also addresses frequently asked tax questions, helping sellers better understand Mexican tax policies and achieve compliant operations. This allows for smoother business operations and increased profitability within the Mexican market.

Imagine losing 20% of your Amazon Mexico store's profits simply because you failed to register for an RFC tax ID. This isn't hypothetical—it's a real financial risk for e-commerce sellers. Understanding Mexico's RFC requirements can help optimize tax obligations and protect profitability.

What Is Mexico's RFC?

The RFC (Registro Federal de Contribuyentes) serves as Mexico's federal taxpayer identification number, similar to a tax registration certificate in other countries. Businesses must use this number for all tax filings and payments. For Amazon sellers operating in Mexico, proper RFC compliance is essential.

Mexico's Tax System Overview

Mexico's primary business taxes include:

Value-Added Tax (IVA): Standard rate of 16%, comparable to VAT systems globally.
Corporate Income Tax (ISR): 30% levy on business profits.

Annual tax filings occur between January and March for the previous fiscal year, while monthly payments are due by the 17th of each month.

The RFC Advantage for E-Commerce

Since June 2020, Amazon began withholding taxes on seller revenues:

Without RFC: Amazon withholds 16% VAT plus 20% ISR—VAT deducted per transaction, ISR collected periodically.
With RFC: Only VAT applies. Properly registered sellers may reclaim previously withheld amounts.

Who Actually Needs an RFC?

Not all Mexico-based sellers require registration:

Mandatory: Sellers using FBA warehouses or local fulfillment centers in Mexico.
Exempt: Sellers shipping directly from the U.S., China, or other international locations (dropshipping model).

Tax Benefits for International Sellers

Chinese cross-border sellers enjoy distinct advantages:

Local Mexican sellers: Pay both VAT and ISR.
International sellers with RFC: Typically only pay VAT while declaring income taxes in their home country.

Key Compliance Questions

Can I use a freight forwarder's RFC?

No. RFCs are company-specific and must match your Amazon account's legal entity exactly. Shared RFCs violate tax regulations.

Do self-fulfilling sellers need RFC?

No. For sellers shipping internationally without Mexican inventory, buyers assume all import duties and taxes.

How to check tax withholdings?

Amazon's Seller Central displays VAT estimates under Order Details > Sales Earnings. Withheld amounts appear under "Marketplace Withheld Tax."

What happens to withheld VAT after RFC registration?

Amazon typically refunds withheld VAT around the 10th of the following month after RFC validation.

Does RFC only save 20% income tax?

Beyond ISR avoidance, proper RFC use enables import tax credits (≈5% savings) and operational expense deductions—significant for high-volume sellers.

Must non-residents without Mexican inventory pay ISR?

Only sellers storing goods in Mexico or fulfilling orders locally incur ISR obligations.

Strategic Considerations

RFC registration represents more than compliance—it's a financial optimization tool. For sellers utilizing Mexican fulfillment networks, immediate RFC adoption prevents unnecessary tax leakage and unlocks potential refund opportunities.