As more Software as a Service (SaaS) companies expand internationally, Mexico has become an increasingly attractive market. Whether your company provides CRM software, cloud storage, ERP solutions, accounting software, collaboration platforms or subscription-based applications, selling digital services to customers located in Mexico may trigger specific tax obligations.
One of the first questions foreign companies ask is whether they need to establish a Mexican subsidiary. In many cases, the answer is no.
Mexican tax regulations allow certain foreign digital service providers to register directly with the Mexican Tax Administration Service (SAT) without creating a Mexican legal entity or having a permanent establishment.
However, this registration process is highly specialized and requires strict compliance with the documentation established by the Mexican Tax Miscellaneous Resolution.
Does every SaaS company need to register?
Not necessarily.
Although many SaaS businesses operate entirely online, each business model should be analyzed individually.
The Mexican VAT Law regulates specific digital services provided by foreign residents to customers located in Mexico. Whether your software falls within those provisions depends on the characteristics of the services provided rather than simply calling the business «SaaS.»
For this reason, a legal and tax analysis should always be performed before initiating any registration process.
Registration under Procedure 1/PLT
Foreign companies providing digital services without a permanent establishment in Mexico may be required to register under Procedure 1/PLT contained in Annex 2 of the Mexican Tax Miscellaneous Resolution.
According to this procedure, SAT requires the following documentation:
- Certificate of Incorporation or equivalent corporate formation document, duly apostilled or legalized, showing that the company’s corporate purpose relates to providing digital platform services.
- Official Spanish translation prepared by an authorized translator when corporate documents are executed in another language.
- Foreign Tax Identification Number issued by the country of residence, whenever required under local law.
- Proof of address in Mexico for notification purposes.
- Power of Attorney or legal representation document. If executed abroad, it must be apostilled or legalized, formalized before a Mexican notary public and, when applicable, translated into Spanish by an authorized translator.
- Valid government-issued identification of the legal representative.
- Appointment of a legal representative in Mexico and designation of a Mexican address for tax notifications.
- Official Form 1/PLT.
Additionally, the legal representative must already be registered with the Mexican Tax Administration Service (SAT).
Obtaining the Mexican Electronic Signature (e.firma)
After the RFC registration has been completed, the company must obtain its Mexican electronic signature (e.firma).
Procedure 2/PLT requires:
- USB drive containing the .req file generated using SAT’s Certifica software.
- Email address.
- Official FE Application Form.
- The same documentation submitted under Procedure 1/PLT.
Practical considerations
One of the most challenging aspects of the registration process is complying with the Mexican proof of address requirements.
Foreign companies should carefully review Annex 2 of the Mexican Tax Miscellaneous Resolution to determine which documents are accepted by SAT before preparing their application.
Because SAT generally follows the documentation requirements very strictly, submitting an incomplete or inconsistent file may delay the registration process.
Final thoughts
Mexico offers a specific registration process for foreign companies providing digital services without requiring them to incorporate a Mexican subsidiary.
Nevertheless, each SaaS business should first determine whether its services fall within the Mexican digital services regime before beginning the registration process.
Preparing the documentation in accordance with Procedures 1/PLT and 2/PLT from the outset can significantly reduce delays and facilitate obtaining both the Mexican Tax ID (RFC) and the electronic signature (e.firma).
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