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16% Tax on Home Repairs


mhopkins2

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There are others on this board who can provide better info I am sure, but if you are provided with an official factura (taxable invoice) then you must pay it as he must may the government the 16% tax when he files his monthly income tax statement. This is the legal way to do business in Mexico. This 16% may or may not be recoverable by you depending on how you are organized for tax purposes in Mexico. By law all services must be invoiced for tax purposes. As we all know, this rarely happens locally but is on the increase nationally as Hacienda cracks down on tax evasion and the underground economy.

He must provide you with a copy of the official invoice immediately (not a few days or a few months later, although small mom and pop operations may not be immediate). This arrives via email as two files, a pdf file and an xml, so be sure to give him your email. If he does not ask for it, chances are he has no intention of sending you the invoice and is pocketing the excess. Paper invocies are not legal. If he fails in this you should not pay the extra 16% and report him to Hacienda. I have seen this both as a legitimate business practice, and I have seen it as a way of price gouging. There are varying scenarios to this so be informed.

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24 minutes ago, Oldyfeliz said:

I remodeled & built homes here for ten years.   Never heard of the 16%.    I would avoid this "contractor"

Why would you avoid this contractor..?    

If he provides you with a factura he is a legal contractor. Not a fly by night contractor who takes your money and doesn't do the job.. I believe some has recently posted about such a contractor. 

If you go into a store such as Home Depot or Walmart  you pay 16% IVA, why shouldn't you expect to pay it to a contractor.. 

So many post on this board about pot holes, sidewalks and other things that don't get fixed... But they don't want to pay the tax that pays for these things....

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It wasn't a lecture, just stating the facts.. The OP states 16% tax which is the mandated amount of IVA 

Have you never noticed the 16% IVA on any of your receipts...?

Approximately 2 years ago the government mandated a 16% IVA tax be collected on just about everything.. Even medical tests/procedures.

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On ‎11‎/‎09‎/‎2016 at 9:37 PM, Semalu said:

There are others on this board who can provide better info I am sure, but if you are provided with an official factura (taxable invoice) then you must pay it as he must may the government the 16% tax when he files his monthly income tax statement. This is the legal way to do business in Mexico. This 16% may or may not be recoverable by you depending on how you are organized for tax purposes in Mexico. By law all services must be invoiced for tax purposes. As we all know, this rarely happens locally but is on the increase nationally as Hacienda cracks down on tax evasion and the underground economy.

He must provide you with a copy of the official invoice immediately (not a few days or a few months later, although small mom and pop operations may not be immediate). This arrives via email as two files, a pdf file and an xml, so be sure to give him your email. If he does not ask for it, chances are he has no intention of sending you the invoice and is pocketing the excess. Paper invocies are not legal. If he fails in this you should not pay the extra 16% and report him to Hacienda. I have seen this both as a legitimate business practice, and I have seen it as a way of price gouging. There are varying scenarios to this so be informed.

http://www.sat.gob.mx/informacion_fiscal/obligaciones_fiscales/personas_morales/no_lucrativas/Paginas/concepto_iva.aspx

Goggle Translation:

VALUE-ADDED TAX [IVA]

This is an indirect tax, under which taxpayers do not pay it directly, but they transfer or charge to a third party, to the final consumer.

 
This tax you must pay when you make acts or taxed by the Law of Value Added Tax activities.

That is, if you sell goods, you pay independent services, you grant the temporary use or enjoyment of goods or imports of goods or perform services, you will pay VAT at the general rate of 16%.

Exempt from IVA tax

You will not pay the value added tax if you get income for the following:

• The provided free, except when the beneficiaries are members, partners or associates of the firm providing the service.


• The teaching to provide the Federation, the Federal District, states, municipalities and their decentralized agencies and establishments individuals who are authorized or official recognition of studies in the terms of the General Law of Education and educational preschool services.


• The provided to its members as a normal consideration for their shares and provided that the services provided are only those relating to the purposes that belong to them, rendered by civil associations or societies organized for scientific, political, religious or cultural exception of those who provide services to sports facilities, when the value of these represent more than 25% of all facilities.


Additionally, when you receive independent personal services or use or enjoyment temporarily goods, rendered or provided by individuals, you will be required to withhold the tax to be passed, and when you receive services provided by brokers when they are natural persons, or when you receive services of land transportation of goods, provided by individuals or corporations.

In this sense, instead of applying the withholding under the previous point, you can retain two-thirds of the tax move actually paid, except in the case of services terrestrial autotrasporte of goods, in which case the retention will be 4% applied the value of the consideration actually paid.

To make withholdings you should find out no later than the 17th of the month following that to which those deductions, without it being necessary any credit against them. The whole owe performed by electronic transfer in the portal credit institutions authorized prior statement must present in the Declarations and Payments Service (referenced payment)."

 

Appears that the IVA tax is due on "independent services."  How that relates to construction contacts I am not sure. Possibly it is due then when remodeling a house.

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On 9/12/2016 at 11:41 PM, Oldyfeliz said:

TelsZ4 ,  Thanks for the  lecture,    BUT I have ten years experience in building Lakeside, and you?

And I suspect this person could be talking about IMMS payments?

 

Sounds like you were working without being registered with Hacienda or paying taxes. Not something I´d be bragging about on a public forum if I were you. And the OP specifically said 16% tax, which would have nothing to do with IMSS.

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