eInvoicing in Latin America Part 1: Mexico

One of the most interesting, successful and fast growing markets for eInvoicing is not Europe but Latin America. For some time now certain Latin American countries have been aggressively pushing electronic invoicing. Brazil, Mexico and Argentina have led the charge with government mandates that require companies to replace standard paper invoices with electronic invoices.

eInvoicing in Latin America is nothing like eInvoicing in the EU, each of these countries has a slightly different process with very stringent consequences for non-compliance. In these three countries, submitting an eInvoice is mandatory by law for certain companies. In this article we’re covering Mexico (part 2 will cover Brazil) where companies that meet certain criteria are required to send a government approved electronic invoice.

On January 1, 2011, Mexico began requiring companies to integrate with the Mexico Tax Authority (Servicio de Aministracion Tributaria or SAT) for real-time issuance and approval of electronic invoices. The electronic invoice in Mexico is a digital tax receipt called CFD (Comprobantes Fiscales Digitales) or an internet digital tax receipt called CFDI (Comprobantes Fiscales Digitales por Internet) that documents and confirms the performance of a business transaction in accordance with the standards defined by SAT, and which can be generated, transmitted and protected by electronic means.

New Change announced on May 31^st, 2013

Prior to this new announcement, companies that had been completing the CFD prior to Jan 1, 2010 could continue to do so. However, according to the announcement, as of January 1^st, 2014 the old CFD process will no longer be valid. When this happens enterprises will have to be in a position to handle the increased volume of CFDI XML.

Also, prior to this announcement SAT required companies with annual revenue of more than 2 million Pesos to send electronic invoices for approval, this has now been lowered to companies with more than 250,000 Pesos in annual revenue. This new change is expected to affect an estimated 500,000 companies, many of them global multinationals with operations in Mexico.

Ten Key Points to Note

In order to be able to issue electronic invoices in Mexico companies must do the following:

1. Obtain a federal registration for taxpayers (Registro Federal de Contribuyentes or RFC) and register with SAT to issue electronic invoices.
2. Obtain an Electronic Signature (Firma Electrónica Avanzada or FIEL) from SAT.
3. Obtain a Certificate of Digital Stamp (Certificado de Sello Digital or CSD) from SAT.
4. Use an Authorized Certification Provider (Proveedor Autorizado de Certificación or PAC) for the validation, folio and digital stamp.
5. Obtain the government seal (Timbre Fiscal), this must be stored in the back-end system
6. Suppliers require CDFI approvals from the government prior to the truck leaving the warehouse and a printed copy should be on the truck.
7. Suppliers must make the XML invoice available to the buyer, typically done via email, however there are other options (e.g., portals).
8. To change an invoice, the original must first be cancelled with the government and a new one must be generated.
9. Once the XML invoice is received by the buying organization it is their responsibility to ensure that the XML is registered with SAT and is authentic.
10. The XML invoices must be stored for at least 5 years (critical to have if there is an audit)

This is an evolving process and there are likely to be more changes. The Mexican authorities are not taking this lightly, so your organizations (whether submitting or receiving invoices) better be in a position to fully comply with all the requirements set forth. Companies such as Invoiceware International specialize in exactly this and can be a valuable resource.

Stay tuned for Part 2: Brazil