Mexico Tax Authority Deploys Big Data – 79 Billion Pesos and counting
It’s been a year of heightened regulatory scrutiny for Latin American business owners, as laws are now on the books that require entrepreneurs to establish an electronic invoicing system in many countries. Thus far, it’s turning out to be a program that’s paying off for governments, most notably in Mexico.
Through the first six months of 2014, for every peso that Mexico’s tax administration service SAT put toward auditing, it recovered 61 pesos, or the equivalent of $4.65, BNamericas reported. From January to June, that totaled nearly 79 billion pesos, a profit increase of more than 34 percent when contrasted with the same period in 2013.
And this is before the eAccounting (eContabilidad) reports are even in play. Remember that as of January 25th, businesses will start to file electronic reports: Chart of Accounts, Trial Balances & Summaries & Journal Entries.
Now that the SAT, the Mexico tax authority, has the adoption of electronically registered invoices via XML – they are now applying the reporting technology to use these transactions for audit purposes.
And big data meets big brother will be in full action. Consider the amount of data the government now has — through the first half of 2014, 2.4 billion electronic invoices have been sent to the Mexican government, up from 119 million in all of 2011, based on SAT data.
The exposure to getting this wrong is:
- Events – such as an invalid XML can be fined up to ~$3000 USD per event
- Deductions taken will be backed out as they will not be able to be substantiated by the registered XML.
Considering 95% of inbound Accounts Payables organizations are not using the XML to drive their process and upwards of 10% of the inbound AP invoices can be wrong (either commercially or technically the XML has issues and could not be used as audit proof –What is your exposure?
- You need to understand how you are managing CFDI & Nomina?
- You need to understand how you manage your AP processes?
- You need to understand the % of inbound invoices that have errors?
- And, if SAP is not your system of record for capturing the government details in order to be able to produce accurate reports, your exposure could be in the hundreds of thousands to millions?
When you consider that the SAT can spend 1 peso to collect 61 pesos, these requirements are significant.