The Mexican Tax Administration Service (SAT) recently issued new obligations in the use of digital tax documents (CFDI), which will be enacted December 1, 2017. This affects all Mexican companies.
The SAT is preparing a series of major changes to digital tax documents (CFDI), which will be legally enforced December 1, 2017.
This affects all Mexican companies, with specific effects on the following business processes:
- Recording payment receipts
- Recording employee expense reimbursements
Changes to Electronic Invoicing
The SAT recently issued new rules that will apply beginning December 1, 2017. These rules include the release of the CFDI’s new version, which taxpayers should use when billing customers and clients in Mexico and abroad. The new version brings additional challenges and includes a list of more than 52,000 products and services taxpayers must use on every invoice.
This means taxpayers must choose the exact description of the product or service from this list, along with the unit of measure they’ll use when selling to customers.
In addition, the SAT requests the taxpayer include six items of additional information on every invoice, including the type of document being issued, method of payment and tax regime to which the taxpayer belongs, among others.
The new rules also require that taxpayers follow specific procedures when cancelling a CFDI. This means a taxpayer will have to request an invoice cancellation by sending a request to its customer through the electronic tax mailbox (buzon tributario). Once received, the customer will only have three days to accept or reject the CFDI cancellation. If the taxpayer receives no reply after three days, then the invoice is canceled.
New CFDI for Payment Receipts
Another major change is the addition of a new CFDI: the Payment Reception Complementary Receipt (PRCD). This electronic document must be issued for every payment received from customers in transactions collected after they issue the regular CFDI for the sale. This obligation also applies beginning December 1, 2017. Taxpayers will have 10 calendar days after month-end to issue PRCDs for all payments received in the prior month. The regulation allows the taxpayer to issue one PRCD for each payment received from a particular customer or one overall PRCD that details all payments received for a particular month from a specific customer. This type of CFDI cannot be canceled but can be modified through another CFDI.
New CFDI for Payroll
In addition, the payroll CFDI will now have to include the travel expense advances/reimbursements paid to employees. This will force employers and employees to be disciplined in supporting these expenses with the right documentation. If not correctly applied, the new rules may result in additional taxable income for the employee and a nondeductible expense to the employer. We’re waiting for the SAT to further clarify these specific rules, as this could negatively affect both the employee and employer.
Travel expenses reimbursed through corporate credit cards, where the employer directly pays the credit card company, may not need to be disclosed on the payroll CFDI of employees. However, the tax authorities haven’t yet confirmed this.
Keep in mind the payroll CFDI was introduced back in January 1, 2014, and its application started April 1 of that year. If detected, employers failing to issue CFDIs for salary payments could have the payroll expense disallowed by tax authorities.
What Action Is Being Taken?
Mexican invoicing and payroll systems companies are working around the clock to meet the December 1, 2017, deadline and comply with the new regulations. The SAT also is providing weekly updates and clarifications on many of these new rules, as some are unclear.
We’ll keep our clients updated as we learn more on these matters.
Through our Praxity, AISBL alliance, Praxity™ member firm Mazars Mexico will be prepared to offer the necessary advice, training and assistance to help our clients implement these new regulations.
Contact your BKD advisor if you have questions.