Latin America at the forefront of electronic invoicing

Factura electrónica en Latam

Electronic invoicing is currently in full expansion worldwide. According to Billentis, this year roughly 40 billion invoices will be exchanged in this format. Of these, more than half, about 25 billion, correspond to Latin America. This region has already become the most advanced in the field in the international scope, due to the fiscal policies carried out by the governments of the various states.

Mexico is positioned as the front runner. This year the country celebrated the tenth anniversary of the Digital Tax Receipt via Internet with a high degree of penetration. Since 2014, the so-called CFDI is mandatory for almost all taxpayers. Now, the Tax Administration Service continues to develop policies designed to cut down the number of administrative procedures on paper. For example, new measures to encourage electronic accounting, or the new e-document for tax withholdings and payment information.

Along with Mexico, Brazil has one of the highest rates of uptake. According to Billentis, in this case the figure is around 90 %. This is due to strict legislation rolled out some years ago, which requires a large number of taxpayers to use the digital document known as Nota Fiscal Electrónica (NF-e).

In Chile, adoption of this system is also widespread, although until recently the Electronic Tax Document was voluntary. It is estimated that more than half of all invoices are now generated electronically, and an ongoing high growth rate is expected due to the new policies. Last October, the country’s big businesses were required to sign up and the Internal Revenue Service expects migration to be completed by 2018.

In the group of e-invoicing early adopter countries, we must not forget Guatemala. There, since 2013, the FACe scheme is mandatory for all individuals or legal entities classified as special taxpayers.

This has also been a year of great breakthroughs for Uruguay, which is destined soon to become another of the leading countries in e-invoicing. D.G.I. Resolution Nº 798/2012 has prompted around a thousand large companies to start using the electronic invoice for tax purposes known as Comprobante Fiscal Electrónico. Currently, the General Directorate of Taxation plans to set out a schedule for adaptation that includes new groups of taxpayers. A similar measure was taken by Argentina with General Resolution 3571/2013, which led thousands of taxpayers to sign up to this system between April and August. Moreover, in recent months the Federal Administration of Public Revenue has decided to include new sectors in e-invoicing, such as the mining industry .

Ecuador has adopted a similar model to these countries and is currently immersed in the process of rolling out electronic invoicing. On 1 October, the first taxpayer group signed up and the rollout of electronic invoicing is expected to be completed in 2015.

In Peru, taxpayers have been able to present their bills electronically on a voluntary basis since 2010, although legislation is moving towards making it mandatory. This year, 239 of the country’s largest companies had to roll out the system and according to some newspapers, the National Superintendency of Customs and Tax Administration proposes that 100% of taxpayers should be using electronic billing by 2017. However, no legislative action has yet been taken in this sense.

Another new feature this year is the announcement by the Costa Rica Ministry of Finance of a new project for mandatory e-billing and e-signature. The new system, which still has no release date, will replace the setup rolled out in 2013 to ensure information processing.

Over the coming year, electronic invoicing is expected to keep on growing worldwide. The policies promoted in the Latin American states are already configured as a role model for many European and Asian countries, such as Vietnam.

 

International Electronic Invoicing Platform

Companies operate in a global environment with partners and customers from different countries and regions. It is indispensable to have e-invoicing solutions tailored to this market situation. EDICOM offers businesses an electronic invoicing platform with permanent monitoring of the state of the laws and regulations in the countries concerned. The result is an e-Invoicing solution ready to issue legally valid electronic invoices anywhere in the world, transparently for our clients, as the data used to build the files (CFDI, NFe, DTE, Facturae, Fattura PA…etc), are taken automatically from the company’s own ERP or accounting system.

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Taxpayers now required to issue tax withholdings document electronically by January 31, 2015

Documento electrónico de retenciones

The SAT, through point I.2.7.5 of the Omnibus Tax Ruling for 2014, establishes the obligation to issue the certificates of retentions (withholdings e-document) for all taxpayers who issue digital invoices online including information on withholdings and payments for tax purposes.

Businesses and taxpayers may issue the e-document with their retentions on an annual basis by the 31 January, 2015 deadline for the issuing of withholdings pertaining to tax year 2014.

 

What is the electronic withholdings and payment information document?

An e-document that contains the information on the withholdings and payments made by taxpayers. This is constructed on the basis of a set of general tax data, to which complement is added with the corresponding tax in each case.

This way, taxpayers must generate a standard XML file with the information required for each item subject to withholding taxes set forth in the withholdings catalogue published by the SAT.

The receipt must be submitted to an Authorized PAC for incorporation of the digital tax stamp that certifies it, prior to its declaration to the SAT. Finally, the receipt is sent to the receiver so that they can present it as required for tax purposes.

 

EDICOM integral solution

EDICOM, as an Authorized Certification Provider (PAC), can supply an integral solution to automate the entire process of issuing e-documents with information on tax withholdings and payments.

This way, our software takes the data needed to build the XML directly from your ERP or accounting system, then stamps it and submits it to the SAT, before forwarding the receipt to the receiver of the withholdings. Our CFDI issuing platform provides a significant added value with the storage system for invoices under Official Mexican Regulation NOM-151-SCFI-2002.

From EDICOM we urge you to contact your commercial adviser as soon as possible, given the proximity of the deadline (January 31, 2015) for presentation of withholdings pertaining to the year 2014.

 

CFDI or Mandatory e-Invoicing in Mexico: Challenges and Opportunities

Between 2005 and 2013 in Mexico, some 10 billion electronic invoices were issued. Taking into account that these data have been growing exponentially in recent years, it is easy to suppose that this figure will have grown considerably by the end of 2014

But what is the reason for such widespread use of e-billing in Mexico? Mainly the fact that use of the CFDI, which is how the electronic tax document used to issue invoices is designated, is mandatory. Nobody can have missed the fact that the monitoring of invoices, as a support to document business transactions, will prove very useful to the tax authorities to ensure due payment of the taxes associated with every trading operation.

In this sense, the SAT or Mexican Tax Administration Service has developed a system whose principal raison d’être was to exert this control, in such a way that only those bills declared online to the SAT with the pertinent electronic certification will be legally valid for tax purposes.

But beyond the obligation, electronic invoicing provides key competitive advantages for companies: Better control systems, greater efficiencies, lower costs, shorter response times, etc. Achieving this level of efficiency calls for something more than simply issuing electronic invoices of an obligatory nature. An improvement in management processes is also required, along with greater technological development and a culture of ongoing improvement. It requires a decisive boost for e-commerce among companies in general, private individuals and public administrations, and which would be achieved largely by placing the focus on two major objectives:

 

Sending 100% of bills in electronic format

If practically 100% of invoices issued in Mexico are electronic, why are so many still printed on paper today? The paradox arises that a high percentage of these documents have to be printed out in order to reach their destination. The same technological solutions employed in the issue of CFDIs should also be prepared to receive them, thereby automating the delivery and integration of the invoices into management systems. On many occasions the problem is not so much technological as procedural, and calls for diverting the control systems based on workflows of authorizations around the document on paper towards parallel models based on electronic systems.

 

Integrating new electronic transactions

The invoice is a key document in business relations, but it is still just another and the final link in the chain.

Why not take advantage of the same technology used for issuing electronic invoices to manage purchase orders or dispatch advices in electronic format? Why not extend technology-based models such as EDI (Electronic Data Interchange)? The possibilities of keeping track of a bill with its corresponding purchase orders and delivery receipts would help to automate sending, reception and query processes and make them more efficient.

Building an electronic society is hard work, which in the case of Mexico already has a solid foundation thanks to e-invoicing. Continuing to taking steps to overcome the fiscal requirement of issuing invoices, and making it a real opportunity to make the Mexican economy even more competitive and efficient, is the big challenge that lies ahead both for public administrations and private initiatives.

This article is part of an analysis of electronic invoicing in Mexico, performed by the online magazine, The Paypers.

For the entire article, please send an email to editor@thepaypers.com to receive the E-invoicing Paypers, a premium-newsletter produced by The Paypers.

CFDI download portals are legal

Los portales de descarga de CFDI son legales

On 5 October, the Mexican Tax Administration Service   (SAT) announced a new non-binding criterion related with the Digital Tax Invoice via internet (CFDI). According to this ruling, it is improper to ask buyers to enter a particular website to get their receipt, since the seller is obliged to issue it directly.

The measure was published a few days later in Annex 3 of the 2014 Omnibus Ruling and, in these few weeks, has caused confusion among some taxpayers who usually employ this kind of solutions in their business. To avoid misunderstandings, the SAT has explained the text by publishing FAQs. One of them states that the invoice must be created on site if the customer requests it and provides the data to do so. When downloading the invoice later entails an advantage for the consumer, traders can continue using this type of portals.

The Mexican Association of Authorized Certification Providers (Amexipac) has also come out in favour of the measure. In an official communiqué, the organization states that the portals for issuing and downloading invoices “are legal and authorized to this end”. The EDICOM Tickets Portal falls into line with these solutions.

In other words, the new SAT criterion states that retailers must deliver the CFDI to their customers immediately upon request. Otherwise, they would be engaging in malpractice that may have consequences. As set forth by the SAT, breach of this duty can result in fines of up to 4,210.00 pesos for individuals and up to 69,000.00 pesos for businesses.

Virtual platforms, like the EDICOM Tickets Portal, thus function as an added value that simplifies the issuing of invoices at point of sale, for both the manager of the store and the customer. It also saves time for both parties, thus avoiding long queues forming.

e-Accounting now a reality in Mexico

Sistema de contabilidad electrónica en México

The new accounting requirement for Mexican companies calls for sending of electronic accounting records as of January 2015, and applies to all legal entities for those documents to be generated in the 2015 period, as well as documents generated and transmitted in the second half of 2014 ( July to December). The regulation is described in detail in the second resolution of amendments to the RMF and Appendix 24 thereof, whereby the SAT develops the new regulated electronic schema for the issuing of electronic documents or accounting reports.

 

Electronic accounting system challenges

Creation

Companies must generate three XML files corresponding to three types of accounting reports. These are:

  • Chart of accounts (single submission and each time a change occurs)
  • Trial balances and summaries (monthly submission)
  • Journal entries (monthly submission)

Construction of the XML file policies involves great complexity, as in order to maintain thorough control of the movements of companies this accounting file must include the UUIDs (universal unique identifier of invoices, aka “tax folios”) of all receipts issued and received by businesses, including invoices for travel expenses or payroll checks.

EDICOM Solution

Our data mapping technology allows us to automatically extract all data from your own accounting system and transform it into XML format. In addition, our system is able to extract the UUID codes for each receipt or invoice issued or received by companies for construction of the vouchers file.

Delivery

Once the messages are generated, the taxpayers must upload them to the Tax Mailbox . This is a private portal accessed with username and password through the SAT website.

EDICOM Solution

The EDICOM platform’s integration capacity allows us to reintegrate the XML files generated back into your own information or accounts management system, ready for delivery to the SAT.

Safekeeping

Under Article 34 of the Regulations of the Fiscal Code of the Federation, accounting files in their XML format must be preserved and stored as part of the accounting procedure, in compliance with the relevant official Mexican standards on generation and preservation of electronic records.

EDICOM Solution

The solution stores the XML files generated under high security conditions, with accessibility guaranteed, at the EDICOM Data Processing Centre. Likewise, all accounting documents follow the technological process associated with recordkeeping rule NOM -151, which certifies their origin and integrity against any future contingency.

Access official information provided by the SAT.

Integral quick start solution

This is a procedure which companies can outsource to an EDI (Electronic Data Interchange) service provider such as EDICOM, whose platform implements the necessary developments to generate the XML files and integrate them with each company’s own accounting system. This way, companies that have an EDI or electronic invoicing solution with EDICOM can roll out this new electronic accounting service quickly, which is a crucial asset, given the imminent requirement announced by the SAT.