Mexico Income Tax (ISR) Withholding: What Amazon Sellers Need to Know
Amazon withholds Mexico income tax (ISR) from seller earnings based on RFC ID registration status, with rates ranging from 0% to 20%. Sellers must register and validate their RFC ID to avoid the maximum withholding rate.
Overview
Amazon sellers operating in or connected to Mexico face income tax (ISR) withholding requirements that took effect on June 1, 2020. Under Mexican tax reform legislation, Amazon acts as a withholding agent, collecting and remitting ISR on behalf of eligible seller accounts. Understanding how these withholdings work, the applicable rates, and the role of your RFC ID registration is essential for avoiding unexpected charges and maintaining healthy account finances.
Key Points / What Sellers Need to Know
- Amazon withholds ISR automatically — Amazon reviews seller accounts weekly and updates ISR withholding amounts based on your RFC ID status, account details, and month-to-date earnings. The withheld amount appears as an unavailable balance in your seller account.
- RFC ID registration is mandatory — Your Registro Federal de Contribuyentes (RFC) identification number determines your withholding rate. Without a validated RFC ID, Amazon applies the maximum 20% withholding rate.
- Two seller types face different rates — Business entities (persona moral) with a validated RFC ID pay 0% withholding, while individual sellers (persona física) face rates ranging from 0.4% to 5.41% depending on gross sales volume.
- No refunds from Amazon after remittance — Once ISR is remitted to Mexico's tax authority (SAT), Amazon cannot issue refunds. Any excess withholding above your actual ISR obligation is released back to your seller account.
- Monthly withholding certificates are provided — Amazon uploads withholding certificates to your account during the first week following each month, documenting the ISR remitted on your behalf.
How ISR Withholding Rates Are Determined
Amazon calculates your weekly ISR withholding based on your RFC ID validation status and your registration type. For business entities (persona moral) with a verified RFC ID, the withholding rate is 0%. Individual sellers (persona física) registered after January 1, 2021 face a flat 1% rate on month-to-date gross sales. Individual sellers registered between June 1, 2020 and December 31, 2020 are subject to a tiered schedule: 0.4% on the first 1,500 MXN, 0.5% up to 5,000 MXN, 0.9% up to 10,000 MXN, 1.1% up to 25,000 MXN, 2.0% up to 100,000 MXN, and 5.4% on earnings exceeding 100,000 MXN. Sellers without a validated RFC ID on file are subject to the maximum 20% withholding rate on all gross sales.
Analysis & Recommendations
Why This Matters
Mexico ISR withholding directly affects seller cash flow by reserving a portion of earnings weekly. Without a validated RFC ID, sellers face a 20% withholding rate that cannot be refunded by Amazon once remitted to the SAT.
Key Takeaways
- Business entities (persona moral) with a validated RFC ID face 0% ISR withholding, while individual sellers face 0.4% to 5.41% based on sales volume
- Without a validated RFC ID, Amazon applies the maximum 20% withholding rate on all gross sales
- RFC validation takes up to 5 business days — submit early in the month to avoid higher withholdings
- Once ISR is remitted to Mexico's SAT, Amazon cannot issue refunds for excess withholding
Recommended Actions
- →Register your RFC ID in Seller Central immediately and upload your CSF document to secure the lowest applicable withholding rate
- →Review your monthly withholding certificates during the first week of each month to verify correct rates are being applied
- →If expanding to Mexico, complete RFC registration before listing products to avoid the default 20% withholding from day one
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