One of the top questions that comes up in virtually every Mexico e-Invoicing meeting is: Do I really need to do the inbound validation of invoices?
Many companies think that they don’t have to do the inbound validations; however, this oversight can lead to jail time and heavy fines.
There are two realities in Mexico CFDI for inbound invoices:
- Validation is not required technically in the current articles
- However, the only way to ensure you pay your taxes correctly and avoid committing fiscal fraud is through validation
So it is not a technical enforcement that should be driving decisions. Instead it should be a fiscal decision. In Mexico, you pay taxes to the government based on the net difference (i.e. the tax you charge your customers minus the tax that you pay your suppliers).
If you are deducting these tax payments on your fiscal books, then not validating every single inbound invoice is just lighting the fuse of a “audit bomb” and then throwing gasoline onto the flame.
We have seen Mexico over the last 12 months move more towards the Brazil NFe model on the outbound invoices; whereby; the approvals are required prior to the truck leaving a warehouse. We also expect to see similar mandated legislation in a more formal technical design in coming months for inbound processing. However, this is not a plausible excuse to wait on the implementation of inbound validation. You should start this asap.
In Mexico with v.3.2, your suppliers must make the XML invoice available to you. This is traditionally done via e-mail. But many companies are looking at EDI communication as well as upload portals to simplify their process of collection. Once you have this XML, you can validate the signatures, certain values, and post returned validation signatures in your system of record. This will ensure, when/if you are ever audited, that all of the invoices and all of the tax deductions you are taking are from only valid and government approved invoices. The process is not difficult, but too many companies are putting their fiscal manager and controllers at risk of criminal penalties. These can all be avoided with a short 4-6 week project. Make sure you understand the realities of both the technical requirements as well as the fiscal requirements — they are not separate issues anymore.