Every country has unique invoice requirements, which dictate how invoices are created and used. These requirements are put in place to protect the buyer, the seller, and the interests of the government. Sellers generally issue invoices to buyers for different reasons. Invoices come either in physical form or electronic form.
- Electronic Invoice Requirement
- Required Electronic Invoice Information
- Requirements before using CFDI e-invoices
- The process of issuing electronic invoices in Mexico
- Printing of Electronic Invoices
- Other Electronic Invoicing Requirement
Electronic Invoice Requirement
In 2011, Mexico became one of the few countries that require all invoices that are issued and used in the country to be in an electronic format. This requirement has made the generation and use of invoices smooth and easy.
The use of electronic invoices in Mexico has been updated to encompass Comprobante Fiscal Digital por Internet (CFDI), from the previous comprobantes fiscales digitales (CFD).
The new electronic invoice has an XML file as well as a PDF readable version. The electronic invoice is a legal document, which is acceptable as an electronic tax voucher that all business and cooperation must present for approval to the Mexican Tax Authority (Servicio de Administración Tributaria or SAT).
Before electronic invoices go to SAT, these first pass through a government recommended (Proveedor Autorizado de Certificación or PAC) website service for verification. The PAC is responsible for the validation of invoices, the assignment of reference numbers, and the insertion of digital signatures before the SAT’s approval.
All invoices must possess specific basic requirements, as stated below:
- A company must acquire approval from the SAT for each type of CFD it plans to use,
- Acquire a reference number from PAC, which consists of a series of authentication codes,
- The CFD must be in an XML or a PDF format. Either of the formats must be structured to suit the requirements of SAT,
- A company must provide a periodic report of CFDs and physical invoices produced to the SAT,
- All invoices must be in Spanish, the local Mexican language.
Required Electronic Invoice Information
All forms of invoices to be valid in Mexico, they must have the following information.
- Names and addresses of all the parties involved,
- Tax details of all the parties,
- Date of transaction, invoice reference number, and location,
- Invoice authentication code,
- Details about the number and cost of each item or service involved, which includes all the total amount involved,
- Electronic signature or electronic stamp of the seller,
- The identification number of real estate is involved,
- The customer’s details for import or export,
- The amount of VAT that applies in the transaction.
Requirements before using CFDI e-invoices
Generating approved CFDI e-invoices requires that the taxpayer fulfill the following steps:
- Register and acquire a Federal Taxpayer Registration number from SAT,
- Obtain the Firma Electronica Avanzada (FIEL)- which is an electronic signature key unique to the taxpayer,
- They should also have a digital stamp called Certificado de Sello Digital (CSD) issued by SAT,
- Hire and access a third-party e-invoicing company (PAC), which must be approved by the government. Other than validating and stamping the invoices, the PAC has the responsibility of keeping tabs on your invoices and providing storage and backup for when the information is needed.
The process of issuing electronic invoices in Mexico
The requirement for the issuance of electronic invoices mandates that taxpayers use a CFDI file format specially designed for that purpose. The process itself follows a number of steps to ensure legal compliance, accountability, and integrity.
Before using the CFDI, users must ensure the invoice is registered in an invoicing system able to detect and record the time a taxpayer generates the invoice. Thereafter, issuers need to use digital certificates to generate and issue electronic invoices.
Here is what happens:
- A provider generates the e-invoice bearing all the details related to the customer as well as taxable information. To qualify as legal, the document must have an invoice number unique to the vendor.
- The issuer transmits the invoice to PAC for validation. If the information is valid and correct, the Proveedor Autorizado de Certificación adds a unique certificate number and stamps before transmitting it to the government. For purposes of ensuring legality, the CFDI must be sent to the SAT within 72 hours of it being generated.
- Parties can then electronically transmit the invoices, including the issuer being able to process both XML and PDF versions of the e-invoice before sending it to the customer.
- Appended to the invoice (XML version) is the issuer’s FIEL.
Printing of Electronic Invoices
If there is a reason to print an XML electronic invoice into a physical invoice, it must adhere to specific Mexican government rules and regulations. Although the seller is not required by law to provide a physical invoice, when a buyer requires it, the seller usually grants the request. The successful conversion of an XML invoice into a physical invoice involves changing it into a PDF document which can easily be printed by either of the parties involved.
Other Electronic Invoicing Requirement
Bonuses, discounts, or returns must also come in electronic invoice format for transmission via email or any valid electronic means. However, the regulation does not allow for negative records on an electronic invoice.
The Mexican invoice requirements is a systematic framework for the generation of an electronic invoice, which has significantly eased all business transactions in the country. These requirements have made the country amongst the leaders in electronic invoicing.
Changes made to the CFDI in 2016, introduced new requirements in what the SAT termed as CFDI version 3.3. The update made it possible for users to have master files that make it easy to access information such as users’ zip codes, cities, and services.