Mexican residents receiving payments from foreign companies are required to report their income to the Tax Administration Service (SAT), according to expansion.mx.
To verify these earnings, it is necessary to issue invoices for professional services. Colín Mospend, from CPPM, noted that a generic RFC for foreign entities must be used, as these companies do not have a registered tax ID in Mexico.
According to rule 2.7.1.23 of the 2026 Tax Miscellaneous Rules, the specific key for transactions with foreign residents is XEXX010101000. The SAT provides detailed invoicing instructions in its Anexo 20 guide.
The challenge of USD payments
If payments are received in dollars, the worker must convert them into Mexican pesos. This calculation must be based on the exchange rate published in the Official Gazette of the Federation (DOF) from the previous day.
“It is important to use the official exchange rate, not the one provided by your bank,” emphasized Joel, a designer who operates under the RESICO tax regime and manages his biweekly invoicing independently.
After issuing invoices, taxpayers must make provisional income tax (ISR) payments. In Joel's case, his applicable withholding rate is 1.1%.
There is also the Salaries and Wages scheme, which applies when there is a subordinate relationship with the foreign company. Under this model, the entire administrative burden falls on the employee.
Saracho Carrillo, a member of the IMCP, explained that unlike a domestic job, the SAT will not automatically withhold taxes. “You are going to have to self-declare all your income, and the SAT won't take anything on account unless you report it,” he warned.
While the company may transfer payroll without withholdings, the worker is responsible for declaring and paying the effective tax rate later. This is the situation for Cecilia, who works remotely for a real estate firm in the United States.
Cecilia files her annual tax return with the help of an accountant and sets aside a portion of her earnings to cover the corresponding tax in April. She described her situation: “I have to declare my own income as if I were a freelancer (...) The percentage I pay stays within the range of salaries and wages.”
The accountant managing her filings warned that the ultimate responsibility for payment lies with the taxpayer: “When the annual declaration arrives, you will have to pay all the taxes on the income you earned.”
