Job Discussion Forums

[Tretyakovskii]

Well, now I'm stumped.

Will some of you with experience with this tell me if clases particulares are exempted from the requirement to charge and collect IVA?

Several websites I've read have suggested that a professional, offering educational services, is exempt from this requirement (and my neighbor, who is nobody, insists that's so); but, I can remember reading posts here which spoke of the requirement to charge it and collect it.

Where's Leslie, when you need her?

[Phil_K]

Any factura or recibo issued has to include IVA. If the student doesn't ask or tells you he/she doesn't want a receipt, then obviously there is no problem but otherwise you're dealing with an official fiscal document and have to follow the rules.

[Tretyakovskii]

PhilK, I appreciate your offering an opinion on this. Some websites written by law firms have suggested some exceptions in which those offering professional services did not have to collect IVA. It's not that easy to know for sure whether to trust something you read on the internet, and the SAT website is tricky to use, with some of its pages requiring access I don't have, so I appreciate your venturing out there.
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Just to give the readers an idea of what I'm talking about, I direct your attention to the following, to see what sense you may make of it: a look at page 13 and 14 will get you started, then you can go back and try to make sense of the whole, at least up to the point where the subject shifts to transportation!

http://www.scribd.com/doc/11506096/Iva-PrestaciOn-de-Servicios

The fault may lie in my bad Spanish, but the presenter seems to be saying that educational services, when offered directly by one person to another, not mediated by any company or employer so as to transform its nature into an entrepreneurial activity, are exempt from IVA.

Of course I'll be posing this question to an accountant, as soon as I can get into see one (I find these types to be about the most elusive of those I've had to deal with in Mexico), but I suspect at least some of you may find these subjects as interesting as I do.

[Phil_K]

You should tell me if this is true, as I owe hacienda around $8000!! I think not.

[Tretyakovskii]

Quoting me, not the website:

[Isla Guapa]

I just sent the link provided by Tretyakoskii to my accountant to get his opinion on whether I shouldn't be paying IVA on the money I've been taking in from my private classes. Depending on his answer, I may be looking for a new accountant!

[Tretyakovskii]

And I may have to rely on your accountant's response: the one I've been trying to get hold of continues to elude me!

[Isla Guapa]

Well, T, mine is always a bit elusive too, or maybe he's not as organized as you would expect an accountant to be. I'll keep you posted.....

[Tretyakovskii]

I'm just getting acquainted with the tax authorities, and processes, at this point but, so far, it hasn't been bad.

It's possible, even in Cancun, to drop in at the tax office and receive assistance- ordinarily, without a long wait. (Can't say that for the process used to give me a FIEL, though: I sat for nearly three hours, as the girl who did it was slow, and one of their two machines used for this was out of service, that day.)

As far as the taxes go, it looks like for any self-employment earnings, I'm in line to have to pay 17% of the net as IETU, what seems to be Mexico's version of an "alternative, minimum tax." So, I calculate the ISR (income tax), then top it up, as necessary, to reach the 17%.

My return is not complete without the DIOT, the report of who my students are, with their names and RFCs.

IVA, the subject of this thread, is something else and, I'll confess, poorly understood by me! IVAs get swapped back and forth, cancelling each other out, as PhilK reported on another thread, in ways that I haven't been able to conceptualize. On my recibos, the tax authorities have told me I'm supposed to disclose the full amount of the IVA (here, just 11%); then, I note 2/3s of it as "retention IVA"!??

PhilK, or any others who feel they've got a handle on this, please explain a little, if you will, the theory and practice involved with IVA. I've looked, online, but the commentators seem to assume some familiarity with the subject.... We don't have IVA (VAT) where I come from, so I've never had to deal with it, and don't understand it.

[Isla Guapa]

I have just heard from my accountant. He looked at all the relevant information at his disposal and came to the conclusion that income derived from giving private classes is exempt from paying IVA only if you have reconocimiento de validez oficial ante la Secretaria de Educaci�n P�blica. Nuts!

[Phil_K]

Thank you for that valuable information, Isla Guapa. I don't have SEP recognition, but IVA is a problem as much of it can be covered by getting invoices for EVERYTHING you buy. What is troublesome is IETU and ISR.

[Isla Guapa]

[Tretyakovskii]

That's progress! Well, now we just have to figure out how to get the reconocimiento de validez oficial ante la Secretaria de Educaci�n P�blica! It would be nice if my students didn't have to pay this IVA, in addition to my fee.

If I learn anything concrete about how to obtain this recognition, I'll post it: I think I just took the first step when I sat for the SEP Certification Exam, but I'm sure there's more to it than just taking a test.
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Getting back to IVA, does anyone think they understand the theory and practice behind it? It's not just a straight forward tax you pay to vendors of goods and services, who then pass it on to the government, that's obvious from the fact that people give facturas, and get facturas, passing around the ultimate obligation to forward money to the tax authorities. Then, to further complicate it, at least for beginners, is the practice of "retencion IVA".

Anybody care to try to flesh out the concept for us? Guapa?

[Isla Guapa]

[Tretyakovskii]