This document provides an overview of Mexico government’s e-invoicing implementation process which added visibility into companies tax’s liabilities, and effective tax collection for government.
Mexico government e-invoice implementation process
Over the last decade, Mexico government has been emphasizing on an effective taxpayer’s control by making it mandatory to get digital certificates for different commercial processes. The Mexico tax regulations have made the digital invoice certification mandatory for all domestic entities. A digital/electronic invoice (Factura Electrónica), also called CFDi (Comprobante Fiscal Digital pro internet) is an electronic document that meets the legal and statutory requirements like that of pre-printed invoices.
Recently Mexico tax authority(SAT) added and changed control points by publishing CFDi3.3 guidelines for digital certificates. These includes new validation rules, catalogues, new structure and restrictions. These guidelines apply to any individual/company which carry out economic activities, receive an income, withhold taxes and draw up payroll payments in Mexico.
Mexico e-invoicing Journey:
Digital invoicing process started in 2004, and it had several upgrades later. SAT published CFDi 3.3 guidelines in 2017.
Types of CFDi:
CFDis are categorized in six broad classifications based on nature of commercial transaction.
Additional information for CFDi3.3:
- 46 validation rules are included to verify CFDi data
- 23 catalogues published on SAT portal to validate or convert existing ERP data
- PAC is an authorized certification partners that has been approved by SAT to generate invoice CFDIs and assign them the tax number(UUID)
- To obtain certification each document must be converted into XML file according to schemas published on SAT portal
- CFDi can be cancelled within 72 hours, but beyond that acceptance from receiver required
- For related transactions, all subsequent documents should have reference document UUID
- For foreign trade transactions additional information are included in a CFDi schema Complemento
- For foreign exchange a confirmation code must be requested in case exchange rate is variance is high
- Addenda section is required based on customer/vendor to record additional information, like a PO number or a bank reference
Foreign Trade Compliance :
Taxpayers who export goods need to include Complemento schema with in CFDi which has its own schema. ICC (International Commerce Complement) section is mandatory for export scenarios, and can be uniquely identified with export code “A1”. This code should be triggered to PAC so that PAC can map ICC section fields.
There are different export sales scenarios, and ICC section should have goods value in USD even though it’s a Non-sales invoice e.g. sample goods, test equipment etc.
This section will record value of goods in USD for both sales and non-sales transactions.
There are 23 catalogues published by SAT. SAP custom table can used to maintain catalogue fields with reference to SAP invoice fields, and map it to IDoc XML fields.
For related documents the UUID of previous document should be sent out while sending a document for certification. E.g. If credit or debit note is issued for any previously income CFDi.
Integration approach for SAP SD invoices:
SAP ERP system can be integrated with PAC using SAP EI middleware. Cross reference mapping is required from SAP IDoc fields to CFDi XML segments and fields. PAC should transform the SAP IDoc XML file into CFDi structure before submitting it to SAT for certification.
Standard SAP invoice IDoc INVOIC02 has most of required CFDi3.3 fields, also it can be enhanced to add additional fields. Catalogue fields can be converted using a custom table by maintaining cross reference value. Some of standard IDoc fields also need to be enhanced to meet CFDi requirements e.g. customer address fields country, state etc.
Additionally, rebill invoice validation check is required. If it’s a rebill invoice, UUID of original document should be sent out to SAT while sending rebill invoice for certification.
ICC section has lot of new fields, some of them can be mapped directly from standard SAP fields, rest will be calculated while generating IDoc. An additional conversion logic has been used for fields like Valordoalres, TotalUSD etc.
Integration approach for SD credit note, Debit note and FI invoices:
SD credit and debit notes can be sent directly for certification by triggering invoice EDI 810 IDoc INVOIC02. To enable this functionality, output type configuration and EDI partner profile set up will be required.
FI 1-Way invoice data can be transmitted through standard SAP IDoc FIDCCP02. A custom program can be created to trigger IDoc from SAP to EI. In case FI document is posted with reference to previously issued SD or FI invoice then UUID of previous document should be sent out while sending new document for certification.
In CFDi3.3 withholding and transfer tax needs to be populated at item level. An enhancement will be required in IDoc program to populate these values at item level. For catalogue fields, a custom table can be designed for cross reference.
Inbound IDoc Interface:
There are three different status messages – Approved, Duplicate and Error. These are received for any invoice sent for approval. If the invoice is certified successfully then XML field is received with approval number and other certification details. In case invoice is already certified and resent for approval, system will receive already approved message. For any error in data system will receive an error message.
Certified invoice can also be sent directly to customer through EI middleware. Once certified XML file is received in SAP, invoice PDF is generated. These two files are stored for any audit reference.
Mexico CFDi solution can be implemented with standard SAP notes, but some custom development required to have all the fields in a file submitted to SAT for certification. Solution framework discussed in this paper can help organisations to accelerate their e-invoicing journey.
This publication contains general information only, and by means of this publication, I am not rendering any professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. I will not be responsible for any loss whatsoever sustained by any person or entity who relies on this publication