e-Factura; a reality in Mexico


One of the Mexican Government’s strategic goals is the simplification and integral modernization of the taxation system, hence according to its criteria, one of the measures to achieve this purpose, is the mandatory establishment and implementation of an electronic invoicing system (e-factura). 

Even though since year 2009 fiscal authorities established that as of the year 2011, the issuance of e-factura would be compulsory, today in our country an uncertainty environment and ignorance of the guidelines imposed by the authority for its exact fulfillment prevail. 

Due to this uncertainty and several concerns we have observed in our clients, our firm has become aware of the need to share with you a brief analysis about this new scheme of invoicing and their main implications. 

Before getting into the topic of this article, it is important to mention that due to the environment of uncertainty and ignorance of the guidelines imposed to establish an electronic invoicing system, the authorities have granted to taxpayers a period of grace and established several alternatives for issuing invoices in order to facilitate to the taxpayers the transition to the new scheme of e-facturas, whose election and adoption of each alternative shall depend on the condition and the specific situation of each taxpayers. 

Lets start to mention the alternatives of invoicing for those taxpayers who do not want to issue e-facturas immediately (delaying in this manner, the use of e-facturas): 

- Preprinted facturas (printed before January 1st, 2011 by an authorized printer): They may continue to be used until the expiration date established in the same. (Pre-printed facturas are valid for 2 years) 

- Printed facturas by the own taxpayer: Starting Jan 1st 2011, the taxpayer would be able to print his own facturas, and no authorized printer will be required, as long as he fits in any of the following cases and meets certain requirements:

i. From January through March of 2011, any person regardless of the amount of his operations. However, it is important to note that after this period, such person will have to issue electronic invoices if he does NOT fit in any of the following situations. 

ii. Those persons whose cumulative income for income tax did not exceed the amount of 4 million pesos during year 2010. This alternative will be in force during 2011 and its extension will depend on whether the authority will grant it for the following year. 

iii. Those persons who start business operations in 2011 and consider their income will not to exceed 4 million pesos. 

iv. For individual operations under $2,000 pesos, even if for the rest of operations taxpayer issues digital or electronic facturas. No term is established for its application.

Requirements so each taxpayer can print his own factura are: 

a) To obtain from the Taxpaying Administration System (SAT – as per its acronym in Spanish), through the internet portal www.sat.gob.mx the folios of the facturas and a bi-dimensional bar code, and, 

b) To include both information (folio and bar code) into the invoices printed, as well as a note that reads: “the apocryphal reproduction of this document constitutes a crime in terms of fiscal provisions”. 

Digital invoices: This is an alternative that may continue is use by those persons who chose to issue digital invoices before the 31st of December of 2010; this option is for an undefined period of time, as long as starting the month of July of 2011 the taxpayer issues digital invoices through his own resources and not through a third party. 

It is important to point out that one of the requirements to come with this alternative is the duty to report to SAT income on a monthly basis.

Electronic Invoicing 

Once invoicing alternatives in force have been described, their requirements and terms of applications, the basic premises and implications regarding electronic invoicing (e-facturas) are hereinafter described: 

In addition to the requirements of form established for digital invoices, in this case the approval of a third party, independent to the authority and taxpayer, named as “authorized certifier” is required on each one of the e-facturas issued by the taxpayer.

The steps for the issuance of the e-facturas are:

a) to apply for a digital certificate,
b) to design an invoice attaching the said digital certificate and,
c) to ask an authorized certifier to approve each of the e-facturas and assign them the corresponding folio (number). 

The certifier is bound to grant the SAT free access to the information he handles and has an up to 72 hours term to certify each e-factura.

According to the above, it is clear that the delivery of information will be by each factura, in other words, before delivering each factura to the client, the taxpayer will have to count with the authorized certifier approval. This situation may create mistrust regarding the manner to obtain such approval, as well as the management and confidentiality of the information which will be handled by authorized certifier.
Please take into consideration that dealing with electronic invoices, it is required to keep an electronic file of the same to make them deductible, situation that as mentioned before, will change transcendentally the tax culture in our country. 

For all the above, it is evident that this new scheme of electronic invoicing is for both fiscal authority and for the taxpayers a radical change in the invoicing system of Mexico, which will be gradually applied in one or two years since it does not include only cosmetic changes, but also implies a change in the fiscal culture in the country, when requiring the big, medium and small companies and to individuals, to quit issuing printed facturas and keeping documental files, to use and manage technology resources to issue e-facturas and to keep electronic files instead; thus affecting almost 80% of taxpayers in Mexico. 

It is important to point out that there are very specific cases with limited options as well without any possibility to adhere to one of the alternatives already mentioned; and that they shall be bound to issue electronic invoices. For which we recommend to all the taxpayers reading this article, to contact your tax advisor as soon as possible to define your situation. 

Final Comments.- 

In our opinion, with this new system of invoicing, the authority shall face and resolve the following medullar issues: 

It will not be an easy change with a quick setting; but instead its consolidation is expected in a medium and long term. This 2011 shall be a year of transition and because there are multiple alternatives of invoicing, it shall be more complex for taxpayers and authority to control and make sure on the veracity of the facturas. 

The widespread ignorance and mistrust of the society regarding electronic documents, as well as the lack of clarity in the established guidelines. 

The lack of confidence to know that part of the financial information of our business will be under the knowledge and custody of a third party, whose responsibilities and duties; as well as the penalties in case of lack of compliance with his duty or misuse of the taxpayers’ information are not clearly defined; the above regardless the fact that currently in our country, there are less than a dozen of authorized certifiers of e-facturas. 

To pretend that this sole measure will eradicate tax evasion without being aware of the necessity of an integral simplification of fiscal law, whose strategy goals includes granting certainty to investors both national and foreign, as well as to increase the number of taxpayers.

For above, we expect in the following months new rules shall be published to further clarify this new scheme. 

 

 

"That article may be contrary to the interpretation of the tax authorities"

 

Finally, we insist on suggesting that you approach your fiscal advisor, review your own particular situation, the alternatives available to you and the decision of what type of invoice to use. Please do not hesitate to contact us in case you need any assistance regarding this particular topic or in any other accounting of tax issue.