Mexico’s Tax Authority (SAT) Discusses Potential Changes to E-Invoicing and Payroll Compliance
Earlier this month, the SAT, Mexico’s tax authority, discusses changes in its e-invoicing, payroll receipts (nomina) and payment receipt (comprobantes de pago) processes. Designed to mitigate data inconsistencies and improper reporting, the SAT is paving the way for a bigger overhaul to its requirements when it releases expected complementos, likely within the next year. In the meantime, here are the currently expressed changes that companies operating in Mexico must adjust to:
- Automatic RFC validation. Now, the SAT will validate the recipient’s RFC (tax identification number) on all invoices paid to ensure it is registered. Previously, companies could make up this number, but this shift demonstrates Mexico’s effort to further automate compliance validations.
- Taxes calculated at the line item level versus the invoice sum level.
- Postal code required Though a relatively minor change, corporate compliance systems must be configured to require this field, and any staff manually entering invoices should be aware of this change. As one of the SAT’s most difficult validations, times zones must be considered in considering the place of issuance.
- Rounding When calculating IVA and totals, companies will now have to configure their systems to round the numbers per the SAT specifications. Companies were entering different totals in the CFDIs causing the data to be inconsistent.
- Export codes required. Similarly, when exporting, the country code and tax ID of the recipient will now be required.
- Comprobantes de Pago for credit notes. In order to maintain the relationship between invoices and payments, comprobantes de pago now must be used for credit notes and partial payments. Previously, companies often paid invoices and IVA separately, so this new process will help to better track and reduce tax evasion.
- Imports as positives. In one of the more sophisticated changes, all imports must now be reported as positives. This means that companies will no longer be able to issue discounts or credits via invoices. Previously, companies were using this process to avoid issuing credit notes, but the SAT is now closing that loophole.
- CFDI for nomina. Nomina will now be issued as a CFDI vs. the current process of creating a credit note. This will allow the SAT to identify and link payroll documents to social security. Nomina will now also include pension and severance packages, where applicable.
The SAT cited several reasons for proposing these changes, including (1) currency and country codes not matching, (2) fields with too much text, (3) incongruent import records, (4) invalid RFCs, (5) negative imports, etc. It’s clear from these potential changes that the Mexican tax authority has a strong understanding of the areas most often resulting in errors and those that present companies with opportunities for workarounds. The government is continuing to enact changes that will eliminate tax fraud and automatically trigger alerts in the event of suspicious reporting.
Companies doing business in Latin America have come to expect these frequent changes, but for those managing compliance internally or using multiple third-party, bolt-on solutions, that doesn’t make compliance any easier. As Mexico prepares for even more changes in the coming year, companies must assess their compliance solutions.