"Anyone who thinks that digital development hasn`t happened yet in Mexico is sorely mistaken," says Gregor Vorderwülbecke, Managing Director of InterGest Mexico. The best example of this is electronic invoicing, which was introduced for certain industries as early as 2011 and has been mandatory for all companies doing business in Mexico since 2014. Paper invoices are not valid.
"The special procedure here is: every outgoing invoice goes out to the tax office frist, and not to the customer," reports Gregor Vorderwülbecke. "Via an interface, the invoice is sent to the authorities. The tax office checks and ideally confirms the invoice. This is done by sending an XML file and a PDF file. The PDF file is for viewing, the XML file is the valid version for tax purposes. A code generated and sent by the tax office also helps with identification in the rest of the invoice process."
Almost all financial transactions in Mexico are digitized
The Mexican tax authority's interface is called "Comprobante Fiscal Digital por Internet," or CFDI for short. Until the end of last year, version 3.3 was in effect here. Version 4.0. was introduced at the beginning of 2022 - with significant consequences for companies, as Gregor Vorderwülbecke explains: "Companies have to adapt their financial accounting programs and ERP systems to the new version. They have a few months to do this, during which both versions 3.3. and 4.0. can still be used in parallel. The changeover applies not only to outgoing invoices, but also to other financial accounting processes. This includes Payment Complement, which is the company's notification to the tax office of which customer's payment was transferred to which CFDI document."
Within the Contabilidad Electrónica (Digital Accounting) process, the chart of accounts is also transmitted to the tax authority so that account movements can be analyzed. The cancellation of an invoice also requires approval from the tax office. The reason for the cancellation is indicated and, after a certain time, the customer must accept the cancellation through the authority's portal. Credit memos must be created using the CFDI document based on the outgoing invoice and approved by the office. As part of the transition to CFDI 4.0. there are generally stricter requirements in place.
But why are the Mexican tax system's requirements so strict or progressive - depending on your point of view?
"It's because of Mexico's history and economic development," Vorderwülbecke explains. "With a 'transparent' taxpayer, tax evasion, gaps, inflation and money laundering are to be actively prevented. That's why tax authorities today have turned into IT specialists."
Do you want to conquer the Mexican market with your company and establish products or services there?
Contact Gregor Vorderwülbecke from InterGest Mexico!
Together with his team of tax advisors and payroll specialists as well as a network of auditors and legal advisors, he will support your market entry in Mexico.
Background InterGest Mexico: Gregor Vorderwülbecke (BA, MBA) is a finance and business development expert. Born in Gütersloh, he looks back on experience of more than ten years in the region. He has headed InterGest Mexico since 2017, providing services for the entire Mexican Republic. With offices in Puebla, south of Mexico City, and in other important, industrial cities, InterGest Mexico has its finger on the pulse of the Mexican economy.
More info at: www.intergest.com/en/mexico/
