Mexico is the most advanced country in the world in terms of electronic invoicing rollout. Since its inception ten years ago, over 9,000 million transactions have taken place through this system. A leadership confirmed by the prestigious annual survey on E-Invoicing/E-Billing: International Market Overview & Forecast drawn up by Billentis consulting. According to this report, the Central American country showed the highest electronic invoicing growth rates in 2013.
This trend is set to continue throughout the rest of the year due to the current tax legislation which requires the majority of taxpayers to use CFDI (Digital Tax Receipt via Internet). In fact, the extension deadline set by the Internal Revenue Service to join this scheme ends on April 1.
The potential of electronic invoicing to improve fiscal control, keep costs down and speed up transactions has sparked overall growth of this payment system worldwide. In this regard, some countries in Asia and the Pacific, interested in the rollout model developed by the Mexican Administration, may implement similar measures in their respective regions.
The European Union, which until now had been more liberal in taking legal action on the issue, will also follow some of the Mexican model’s guidelines. In fact, in late 2013, representatives from SAT and the European Commission met with the ESSPA and AMEXIPAC to initiate a bilateral relationship and make headway in this area.
In recent years, Latin America has become one of the biggest promoters of e-invoicing. Further proof is that Brazil and Chile are also front-runners in rolling out this payment system. In addition, other countries such as Costa Rica, Ecuador, Guatemala and Uruguay will soon be taking up electronic billing.
To illustrate this historic evolution, EDICOM has drawn up an infographic summarizing the e-billing milestones that have taken place in Mexico over the past decade.
This year marks the tenth anniversary of electronic invoicing in Mexico. On January 5, 2004, the Ministry of Finance and Public Credit, through the Official Gazette of the Federation, issued the first ever schema for the Digital Tax Receipt or CFD. Since then, approximately 9,000 million electronic billing transactions have taken place. This figure is set to grow in coming years as the CFDI becomes mandatory, making Mexico one of the most innovative countries in this area.
In fact, the rollout of electronic invoicing in the Central American country has aroused the curiosity of the European Union and is now an example to follow, as we reported here. And with the rollout of CFDI, transparency and savings for taxpayers have grown exponentially, through greater fiscal control and process optimization.
The implementation of electronic invoicing in Mexico is the result of a progressive tax adjustment over the past ten years. From the CFD’s debut, with figures for 2005 of only 139,509 transactions carried out by this method, to compulsory use of CFDI for most taxpayers and payroll receipts in 2014.
Payroll issuance and delivery of payroll entails expenses for Mexican companies of over 37 pesos on average. A considerable part of the cost (90%) goes on the tasks of printing, delivery and safekeeping of the receipt signed by the worker. These data are taken from a survey carried out by EDICOM in interviews with benchmark companies in the country with more than 400 employees.
The report also provides other significant data: workers spend around 20 minutes collecting and signing their paychecks, a period that may increase in companies with more employees, where long waiting lines form at the doors of the Human Resources Department. Moreover, it is estimated that 5% of the documents have to be repeated due to mistakes or going missing. These figures show up the operational inefficiencies involved in manual payroll management.
Furthermore, with the recent Tax Reforms, the organizational drawbacks faced by companies in Mexico are compounded by the technical difficulties, as it is now mandatory to issue payroll and salaries in CFDI format for submission to the SAT.
The solution to avoid this type of inconvenience is automation of the process by means of totally electronic management. This can give rise to a saving of up to 88% per document for Mexican companies, but also brings other associated benefits. With the rollout of an electronic solution such as EDICOM CFDI Payroll, there is no more waiting, manual errors or papers going missing, and all the legal requirements are met. The workers sign their paychecks from their workstations with a simple click.
You can find out more about the survey’s conclusions and the EDICOM CFDI Payroll solution here:
As of 1 January this year, most natural and legal persons have the obligation to issue their employees’ paychecks as though they were just another CFDI. To do this, they must have an Authorized Certification Provider (PAC) to stamp these digital receipts and submit them to the Tax Administration Service (SAT) before sending them back to the issuing company.
Companies in Mexico may need to issue up to 4 paychecks monthly, so managing these receipts is a complicated task for many businesses. However, this new tax obligation is a great opportunity to optimize the process, as workers can now sign their paychecks with a single click, without waiting or standing in line. In other words, payroll management can become a 100% electronic process.
To get the most from this new system, EDICOM has created the CFDI Payroll Solution, a management software suite that can cut employer’s costs by 88% by simplifying the process. The solution also enhances security and safekeeping of salary payment receipts.
The Omnibus Tax Ruling (RMF) for 2014 announces certain changes relating to the CFDI. The most notable is the three-month extension granted by the Tax Administration Service (SAT) to some taxpayers to allow them to switch over to the new electronic billing schema. All natural persons who did not earn over 500.000 pesos in tax year 2012 tax may continue with their current billing system until 1 April, after which the CFDI becomes mandatory. This measure, announced by the SAT, could benefit some 563,000 taxpayers.
Moreover, individuals will no longer need to have a digital seal certificate to issue electronic invoices, whether they do so through an Authorized Certification Provider (PAC) or register their income and expenses via the SAT portal. In other words, having the FIEL and RFC will suffice.
Along with this extension, there are also another two related with issuing payroll and salaries in CFDI format. On one hand, the RMF for 2014 states that both natural and legal persons with income in excess of 500.000 pesos will have the period until 1 April to issue the CFDIs corresponding to salaries and withholdings backdated to 1 January. However, this extension will only apply if they have presented their clarification statement on the SAT website.
On the other hand, the document explains that taxpayers contributing to the Fiscal Incorporation Regime (REPECOS) as of 12 January 2014 will not be obliged to issue CFDI until 31 March for salary and payroll remunerations.
The remaining taxpayers who do not meet the requirements are obliged to invoice by means of CFDI as of 1 January.
EDICOM, first ACP in Mexico
EDICOM is the first PAC in Mexico and the most comprehensive on the market. The company has NOM151 (electronic notary services), ISO and SOX certificates. Edicom also has a Service Level Agreement (SLA) guarantee that undertakes to provide 99,9% service availability.
To clear up any doubts or queries about CFDI, visit http://www.cfd-cfdi.mx/