RFC: What is it and how does it work?

What is the RFC and how does it work? The RFC (Federal Taxpayer Registry) is an essential component of the tax system in Mexico. For both individuals and businesses, the RFC plays a fundamental role in identifying and fulfilling tax obligations.

What is the RFC and how does it work?

The RFC (Federal Taxpayer Registry) is an alphanumeric code used by the government to identify individuals and legal entities that conduct economic activities in Mexico. This code consists of 13 characters for individuals and 12 characters for legal entities.

Taxpayer Identification Number (RFC) for individuals

• First and second letters of the paternal surname

• First letter of the secondary surname

• Initial of the taxpayer's first name

• Date of birth in the following order: year, month, and day

• Taxpayer Identification Code (Homoclave) assigned by the SAT (Mexican Tax Administration Service)

Taxpayer Identification Number (RFC) for legal entities

• The first three digits will be the company's initials or a combination thereof.

• The next six components correspond to the company's incorporation date. These components represent the year, month, and day the company was created, following the format year-month-day.

• The last three digits are the unique identifier assigned by the SAT (Mexican Tax Administration Service).

Each person who registers with the RFC has a specific tax regime based on their economic activity, even though there is only one type of registration.

What is the RFC used for?

The main purpose of the Federal Taxpayer Registry (RFC) is to allow the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) to have greater control over the country's economic activities. Its function is to ensure compliance with the legal and tax obligations acquired when establishing a company and carrying out commercial operations. Failure to comply with these obligations may result in penalties.

• Processing tax payments and fulfilling tax responsibilities.

• Accessing bank accounts, credit cards, social security programs, AFOREs (Retirement Fund Administrators), and INFONAVIT (National Workers' Housing Fund Institute).

• For companies, the RFC is necessary to file periodic and annual tax returns.

• Carrying out procedures such as registration with the Mexican Social Security Institute (IMSS) and the Ministry of Finance for the payment of the Payroll Tax (ISN).

• Issuing electronic tax receipts (CFDI) to company employees.