REPSE records: evidence for tax deductions and VAT credits
To deduct a payment for specialized services in Mexico, the invoice is not enough. Article 27, section V of the Income Tax Law (Ley del Impuesto sobre la Renta, LISR) obliges the client to verify the provider's REPSE registration when it makes the payment and to obtain specific documents from the provider. To credit the VAT (IVA) charged, the Value Added Tax Law (Ley del Impuesto al Valor Agregado, LIVA, article 5o., section II) also requires a copy of the provider's VAT return and of the acknowledgement of its payment. Without those files, the income-tax deduction and the VAT credit are exposed in any tax review.
The list comes from the law, not from a best practice
The last paragraph of section V of article 27 of the LISR (in Spanish) states what the client must verify and which copies it must obtain from the contractor. Turned into a file:
| # | What it proves | Document |
|---|---|---|
| 1 | The provider holds a REPSE registration when the payment is made | The law asks you to verify it, not to file a copy. The practical proof of that verification is the registry check dated on the payment date, together with the registration notice (Aviso de Registro) the provider delivered |
| 2 | The wages of the workers who provided the service were paid | Electronic payroll invoices (CFDI de nómina) for those workers, not for the whole workforce |
| 3 | The income-tax withholdings on those wages were paid over to the tax authority | Payment receipt issued by a bank for the return declaring the withholdings (declaración de entero) |
| 4 | The employer and employee social-security (IMSS) contributions were paid | Proof of payment (SIPARE, the IMSS referenced-payment system) |
| 5 | The housing-fund (Infonavit) contributions were paid | Proof of payment |
The nuance almost everyone misses: the law asks for the CFDI "de los trabajadores con los que le hayan proporcionado el servicio" (of the workers with whom the service was provided to the client). The client is entitled to the receipts of the workers assigned to its service, and only those. Asking for the full payroll goes too far; accepting no receipts at all falls short. The correct file follows the list of assigned workers.
VAT has its own pair of documents
The income-tax (ISR) deduction and the VAT credit are protected by separate files, and the LISR file does not cover the VAT side. To credit the VAT, article 5o., section II of the LIVA (in Spanish) obliges the client to obtain from the provider a copy of its VAT return and of the acknowledgement of receipt of the payment, for the period in which the client paid for the service. The provider must deliver them no later than the last day of the month following the payment. If the client does not collect them within that period, the same section obliges it to file a supplementary return (declaración complementaria) reducing the VAT it had credited.
Why materialidad, and not just paperwork
In Mexican tax practice, materialidad means evidence that the service actually took place. Article 15-D of the Federal Tax Code (Código Fiscal de la Federación, CFF; in Spanish) denies tax effects to personnel subcontracting, even when it is dressed up as specialized services, and simulated arrangements can escalate to criminal liability (CFF article 108). In a review, the tax authority (SAT) does not only ask for the five documents: it asks whether the service happened. Technical and operational evidence of the service (deliverables, reports, logs, access records, coordination emails) is what answers that question. The document file proves that what the law requires was paid; the operational evidence proves that the service was real.
Three separate clocks
The file is built at the pace of the payments, not once a year. Rebuilding it in April of the following year, when the provider has already rotated staff or stopped answering, is the story behind almost every lost deduction. But "every month" mixes three things that should be kept apart:
| What | When | Where it comes from |
|---|---|---|
| Verify the provider's REPSE registration | At each payment of the fee for the service | The law: LISR art. 27, section V and LIVA art. 5o., section II («cuando se efectúe el pago», when the payment is made) |
| Collect the provider's VAT return and the acknowledgement of its payment | Those for the period in which you paid; the provider must deliver them no later than the last day of the month following that payment | The law: LIVA art. 5o., section II |
| Gather documents 2 to 5 of the table (payroll, withholdings, IMSS, Infonavit) | The law sets no date for obtaining them; it does require having them in order to deduct | A document-collection routine, not a legal deadline |
A VAT example: for a service performed in March that you pay on May 12, you need the provider's VAT return and payment acknowledgement for May, and the provider has until June 30 to deliver them. The month that governs is the month of payment, not the month of the service or of the invoice.
The routine we recommend, and that RepseShield follows with each provider, combines the three clocks into a monthly cycle:
- Before paying: a registry check with dated evidence. How to do it is in the verification guide.
- With the payment: a request to the provider for documents 2 to 5 for the service period and, where applicable, for the VAT pair for the month of payment.
- At the close of the following month: a complete file for the period, or an explicit list of missing items claimed in writing. This date is our collection target; only for the VAT pair does it coincide with the legal deadline.
For providers: the file is your sales argument
A provider that delivers the complete file without being asked removes the only tax reason its client has to doubt the relationship. Providers who do this systematically renew contracts with less friction; those who deliver late teach their client to look for alternatives. The ICSOE and SISUB filings complete the same picture before the IMSS and Infonavit.