Retention taxes that basically means negative rates. In Mexico, some kind expenses vendor sell, they must retain -4%. Freight as example one
Retention means Vendor must retain that tax from you and report directly to Tax Goverment agency. Example, if vendor sells a freight service to you by 1,000 pesos. They charge 16% of our main tax (we called IVA) but also must retain -4% (IVA) so :
Subtotal 1,000
+IVA (16%) 160
-Ret IVA (4%) 40
Total $1,120
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Oscar Gonzalez
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