Digital platforms, CURPs and RFCs, and what will happen if you do not have them
Some of you may already have received an email from VRBO, Expedia or another digital platform asking for information including fields for a CURP and RFC numbers.
What is a CURP number?
CURP stands for "Clave Única del Registro de Población" (Unique Code of the Population Registry); after some years coming up with its characteristics and what use it would be given, as well as non-systematic usage, in October 1996, the federal government published regulations stating it would not only be mandatory for every single person in the Mexican population (nationals or foreign residents) to be given a CURP number meant to replace the need to show your birth certificate for any type of paperwork that called for proving both identity and nationality.
CURPs are 18-digit codes made up of four letters from your name (first letter in your paternal last name, first vowel in your paternal last name or second vowel if the first letter is a vowel, first letter in your maternal last name and first letter in your first name), six numbers stating your birth date, an H or an M depending on whether you are a man or a woman, two letters for the state you were born in (NE, meaning “Nacido en el Extranjero” for foreigners), the first inner consonant in your paternal last name, the first inner consonant in your maternal last name, the first inner consonant in your first name, a verifying digit (0-9 for people born up to 1999 and A-Z for the ones born as of year 2000. They will soon be out of letters and will have to come up with something else) and an “homoclave” a unique digit generated through a special algorithm to avoid having more than one person with the same CURP number.
The government‘s intentions of having this number replace the birth certificate have not yet accomplished that, leaving Mexicans with a CURP, an RFC, a social security number and a voter number, while, of course, still having to produce our birth certificates for pretty much anything. However, they have turned it into a sort of linking number so it is now in every government database as a unique code that basically means they know you are you and you only get one of the other numbers. This has been no easy task as millions of Mexicans did not have CURP numbers for many years while others, due to lack of coordination and communication among government entities, had several CURP numbers linked to their names.
Mexican nationals get their CURP number from Secretaría de Gobernación's RENAPO (Registro Nacional de Población) through the civil registry when their birth certificate is issued and only they can make changes or corrections to it. Foreign residents on the other hand, now automatically get one from Immigration when they get their residency card. For many years, however, they had not decided whose obligation it was to issue them between Immigration and SAT (via their access to RENAPO's systems) so, up until 2014 when they finally settled on it being Immigration’s job, may foreign residents did not systematically get one. The CURP number is printed on the front of the resident card, if yours does not have one, you need to present a letter at Immigration requesting one.
CURP information is public, if you do not know what yours is or if you have one at all, go to https://consultas.curp.gob.mx where you can both search for it, or anyone else’s for that matter, and print the official CURP form. This is also the reason a lot of cyber cafes offer “CURP services” which basically consist of a search and printing the form. This does not mean you get one at any cyber cafe, as only RENAPO and the other government agencies mentioned above can actually create a new one.
What is an RFC number?
RFC stands for "Registro Federal de Contribuyentes" (Federal Taxpayers Registry) and this is Mexico's tax ID number. Just as CURP (CURP is based off the basic structure of the RFC), it is made up of four letters for your name and six numbers for your birth date followed by a three-digit "homoclave" generated through a special algorithm intended to avoid having more than one person with the same RFC number. Each digit in the homoclave verifies information in the previous digits.
RFC numbers are generated and stored in SAT's database (Servicio de Administración Tributaria, the branch of Secretaría de Hacienda y Crédito Público in charge of coming up with tax rules that explain specific procedures to comply with tax laws, receiving tax filings, and collecting taxes). Just as CURP numbers, RFC numbers are unique to each person and they never change. All new additions to the RFC database have to be done using SAT's systems and, depending on several factors, getting one may or may not mean you have tax obligations in the country.
Why do digital platforms want this information?
As we have explained in other blog posts, the 2020 Tax Reform states that digital platforms that serve as online intermediaries for several types of businesses will have an obligation to withhold some income tax and some IVA (VAT) as of June 1st, 2020. These withholdings have two purposes:
Making sure SAT will get their tax money.
Provide information on who is doing business online so they know who to require to pay if they do not comply with their own filing obligations as the amounts withheld are not the whole tax.
In order to accomplish this, SAT needs to know who the platforms are withholding from which will be achieved by receiving information from the platforms on what RFC numbers the withholdings are for. The CURP number is needed to validate the taxpayer's identity as well as the fact that they do indeed have an RFC number. The platforms will have to issue a CFDI (Comprobante Fiscal Digital por Internet, commonly known as electronic factura even though not all CFDIs are invoices, these withholdings being a good example of this) which is a digital document that gets electronically stamped both by the issuer and by SAT once SAT has validated all the information, including, of course, the CURP and RFC numbers. If the RFC number entered by the platform does not exist or it is not linked to the CURP number entered, they will get a system error stating the reason the CFDI cannot be issued.
Due to the above, it is imperative that they be provided with factual information and that taxpayers do not attempt to use online CURP or RFC "generators" that do not really generate a number but estimate what it would be. As has been previously explained, CURP numbers are only issued by RENAPO through the Civil Registry or Immigration while RFC numbers are only issued by SAT.
What happens if you do not provide that information?
If, for some reason, you do not want to provide that information or you do not have it because you are not a resident and use a tourist visa when you come into the country, instead of withholding the amounts explained in this post as a provisional tax payment, the platforms will withhold a flat 20% for income tax and all of the IVA (16% for most of the country). This also means you will lose the ability to write expenses off thus being taxed on the gross.
Feel free to contact us if you need further information on the Tax Reform.
On a side note, if you are curious about how they manage the void that results from some foreign residents not having a maternal last name to use for the third digit, CURP numbers have an X instead while RFC numbers skip it and use the first and second letters in the first name.