Mexico introduced new tax requirements concerning electronic invoicing, effective July 2012. The rules are regulated by the Mexican federal tax code and developed in General Tax Rules approved by the tax authorities. The legal framework for invoicing regulations is restructured as a result. Companies should familiarize themselves with the effect that invoices and the presentation of invoices have on their business.
Previously manufacturing, and other, companies established in Mexico only had to transact and store paper invoices, but on January 1, 2011 Mexican fiscal authorizes began asking companies to integrate with the Mexico Tax Authority (SAT) for contemporaneous issuance and support of electronic invoices. The new Mexican invoicing process is very similar to the Brazilian Nota Fiscal Processes. The new framework unifies all the necessary legal rules in the Federal Tax Code and simplifies them by eliminating some formerly required content (like the supplier’s name and tax residence). It also expansively answers questions concerning the handling of paper invoices; the tax legitimacy of statements generated by financial institutions, and simplified invoices. The endorsement was accompanied by changes to the General Tax Rules, which present the legal structure. Specific new rules for non-residents in Mexico issuing service supply invoices documenting a supply of services, a delivery of goods, or an asset leased to a Mexican taxpayer. Obligatory content was set that these invoices must include to be regarded as legitimate. The new rules promote the universal application of the new electronic invoicing system introduced in 2011 called Comprobante Fiscal por Internet (CFDI).
New Electronic Invoices in Mexico:
- Digital tax receipt “Comprobante Fiscal Digital” (CFDI) or “factura electronica” documents and endorses the presentation of a business deal in unity with the standards defined by the SAT in Annex 20 of the Miscellaneous Tax Resolution.
- Paper invoices printed before 2011 by an authorized printer may continue to be used until the expiration date.
- Where required, new paper invoices need to be bar-coded (CBB)
- Transition process does not apply to companies with an annual income of more than $4 million Pesos (US $325,000).
Specific Requirements for Electronic Invoices:
Classification Electronic Invoice
Annual Income Printed Bi-Dimensional Bar Coded Version Electronic (CFDI) Version
More than US $325,000 Only for transactions of US $162 or less before taxes 3
US $325,000 or less 3 Optional
Purpose and Benefits of Electronic Invoicing in Mexico:
- Saves money related to the costs of issuing “factura,” or invoices because the requirement to have them printed on special stationary by licensed printers has been eliminated.
- Streamlines administration, including shipping and receiving.
- Helps reduce the risk of fraud since the documents will be subject to certain security measures.
- Establishes a means to immediately verify the identity and tax eligibility of the person signing the electronic invoice.
- Includes the intervention of a 3rd party service provider, pre-determined by the Mexican Tax Authorities in an electronic pre-validation invoice process.
- Makes it the responsibility of recipient of the invoices to validate the code obtained by a third-party service supplier from the tax authorities, and to certify the electronic certificate generating the digital stamps.
This invoicing system is the general etiquette applicable to Mexican taxpaying business, but is not applicable to manufacturers in Mexico operating under The Offshore Group’s Shelter Plant. Invoicing formats that are still valid include: statements generated by financial institutions, paper invoices with a watermarked security code, and other electronic formats permitted in exceptional cases by the tax authorities.
Acquiescence is an issue for global companies, which encompasses not only supplier invoices, but also outbound invoices to customers. Compliance is the dominant attribute for the implementation of electronic invoicing in the near future.
Key Changes implemented after July 2012:
1. Shipping Requirements: Deliveries within Mexico must have the comprobante (and UUID) as part of the documentation accompanying trucks with deliveries. Failure to obtain these documents could result in the truck and its good being impounded with fines demanded before release.
2. Account Number: Invoicing parties are expected to know and report the last 4 digits of the account numbers that their customers use for payment.
3. Fiscal Address: The street and address information will no longer be required on invoices, but the country, state and postal code still will.
4. Installment Payments: Companies must send an invoice for each payment plus an “informational” invoice to document the entire amount.
Steps required to issue electronic invoices in Mexico:
- Obtain a federal registration for tax payers (RFC) and register with SAT
- Obtain an electronic signature (FIEL) from SAT
- Obtain a certificate of digital stamp (CSD) from SAT
- Use an Authorized Certification Provider (PAC) for the validation, folio, and digital stamp.
All companies operating in Mexico must keep track of the invoices issued by storage or back up of digital guarantors, so as to have on hand any explanation required by SAT in the future. Failure to adhere to the changes is considered a financial felony and could result in the same sanctions for tax fraud (6 months to 9 years imprisonment).