The document outlines significant changes in Mexico's business-to-government compliance landscape regarding e-invoicing and statutory reporting, including the introduction of electronic audits by the SAT and strict penalties for non-compliance. Notably, new requirements for e-invoicing, particularly concerning foreign trade transactions, will be in effect starting January 2017, emphasizing proper data validation and reporting. Additionally, the document stresses the importance of integrating compliance measures into corporate systems to reduce auditing risks and ensure accurate tax reporting.

1. 2016 Mexico
Business-2-Government Compliance
E-Invoicing & Statutory Reporting Updates
INVOICEWARE INTERNATIONAL
Global Compliance - Simplified

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Business To Government Challenge
Tax Authority’s Are Inserting Their Approval into Corporate Business Transactions
Governments Turn To Automation
To Maximize Tax Collections
 Tax authorities are inserting
their approval and real-time
registration processes into
day to day corporate business
transactions
 Latin America: now 10
countries with mandates
similar to Brazil & Mexico
 Turkey, Vietnam, China,
Indonesia all moving this
direction

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Business To Government Challenge
Expanding Globally
2009
Brazil Nota
Fiscal &
SPED
2015
10 Countries in
Latin America
2015
Cross Border
Initiatives
Move to Pilot
- US  Mexico
- eVAT EU
- Br, Mx & Ar
Cross Border
via CIAT
2016 Country
By Country
Reporting:
Target
Transfer
Pricing

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Mexico eContabilidad Issues in 2016
SAT Has Announced eAudits will start in second half 2016
Aristoteles Nunez, an official with the SAT, recently discussed the new auditing
procedures with CNN, indicating that targets of the audits will depend "much
on the taxpayer’s behavior and conduct.” Specifically, audits will be triggered
when there are discrepancies between the taxes a company declares as
compared to the SAT’s records for that taxpayer from sources such as e-
invoices, e-accounting reports and those of their customers and suppliers.
The SAT expects to launch these electronic audits during the second half of
2016, moving about 4,000 of its 45,000 annual audits to the electronic system
this year. The ultimate goal, Nunez reports, is to conduct all audits
electronically.
Amparo Updates
 Many companies have not implemented Polizas report (Journal Entries) – this is Audit Defense
 Many Amparo have “end of life” whether via court decision or via expiration date
 SAT view on Polizas
 Even if win Amparo, if you are audited you will supply the Poliza reports, the SAT will pick them
up from your office instead of electronically filing

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Mexico 2016
Penalties for Not Having XML and Reports
$300-$4,602 USD fine per missing or incorrect e-invoice
 $15-$4,092 USD fine per invoice that does not match
accounting records (eContabilidad)
 Up to $200 USD fine for each transaction that should have
been posted in the delinquent or inaccurate Polizas
 Increased risk of a direct audit by the Mexicon tax authority
(SAT) for compliance errors
 Adjusted taxable income based on presumption of unreported
income, resulting in interest, penalties and fines on the
delinquent taxes owed – often 80% to 100% of the imposed
tax deficiency

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Mexico 2016
 Complemento & Catalogos Adjustments forthcoming
 June 2016 SAT Web Session:
https://www.youtube.com/watch?v=gGyHNh5Vk1k
 Foreign Invoices – starting to share data with Canada/US
for purchases from Mexico RFC.
 January 2017 Deadline
 The SAT has announced a new requirement that affects foreign trade
transactions. The requirement will affect the E-invoicing process as
the CFDI messages affected will need to include a new “Complemento”
specific to comercio exterior (Foreign Trade). The “comercio Exterior”
complemento will be mandatory for tax payers that engage in definite
exports of goods with the pedimento key “A1”.
 http://www.sat.gob.mx/informacion_fiscal/factura_electronica
/Paginas/complemento_comercio_exterior.aspx

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Complemento Structure
Comercio Exterior
Mandatory Attributes (9):
TipoOperacion
NumRegIdTrib (Receptor)
Calle (Destinatario)
CodigoPostal (Destinatario)
Estado (Destinatario)
Pais (Destinatario)
ValorDolares (Mercancia)
NoIdentificacion (Mercancia)
Marca (DescripcionesEspecificas)
Mandatory Attributes (9)
Optional Attributes (28)

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Mexico 2016
As discussed by SAT in June Web Session
 The SAT cited several reasons for these potential
Complemento & Catalogos changes, including:
 currency and country codes not matching
 fields with too much text
 incongruent import records
 invalid RFCs
 negative imports, et al

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Mexico 2016
As discussed by SAT in June Web Session
 Automatic RFC validation. SAT will begin validating the
recipient’s RFC (tax identification number) on all invoices paid to
ensure it is registered. Previously, companies could make up this
number, but this shift demonstrates Mexico’s effort to further
automate compliance validations.
 Taxes calculated at the line item level versus the invoice sum
level.
 Postal code required Though a relatively minor change,
corporate compliance systems must be configured to require this
field, and any staff manually entering invoices should be aware of
this change. As one of the SAT’s most difficult validations, times
zones must be considered in considering the place of issuance.

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Mexico 2016
As discussed by SAT in June Web Session
 Rounding When calculating IVA and totals, companies will now
have to configure their systems to round the numbers per the
SAT specifications. Companies were entering different totals in
the CFDIs causing the data to be inconsistent.
 Export codes required. Similarly, when exporting, the country
code and tax ID of the recipient are expected to be required.
 Comprobantes de Pago for credit notes. In order to maintain the
relationship between invoices and payments, comprobantes de
pago now must be used for credit notes and partial payments.
Previously, companies often paid invoices and IVA separately, so
this new process will help to better track and reduce tax evasion.

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Mexico 2016
As discussed by SAT in June Web Session
 Imports as positives. In one of the more sophisticated changes,
all imports must now be reported as positives. This means that
companies will no longer be able to issue discounts or credits via
invoices. Previously, companies were using this process to avoid
issuing credit notes, but the SAT is now closing that loophole.
 CFDI for nomina. Nomina will now be issued as a CFDI vs. the
current process of creating a credit note. This will allow the SAT
to identify and link payroll documents to social security. Nomina
will now also include pension and severance packages, where
applicable.

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Compliance Impact on IT
Skyrocketing Cost to Build, Monitor & Maintain
Do you want to be in the business of compliance?

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Business To Government (B2G) Compliance
Invoiceware Compliance As A Service for SAP ERP
Outbound Billing Advantages
 Single Monitor for End Users
 Automated Contingency to avoid
shipping issues
 Automated Cancellations &
Corrections
Inbound Account Payable Advantages
 “Okay to Deduct” – ensure
invoices are compliant
 “Okay to Pay” – automate PO,
Invoice, GR matching
 Audit Defense – ensure XML
backs up reports
Fiscal Reporting
 SAP is system of record, not local
3rd party database
 Single version of the truth
 Data validations ensure accuracy
prior to filing reports

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Invoiceware SAP Management Console - Billing
Seamless Integration – Provides Monitoring, Audit, Recovery and Archive Access
Integrated Archive
Access
Automatic
Processing Grid
Integrated
Cancellations
Manual
Processing Grid
All Signing
Attributes Included
“Full Loop”
Status Tracking,
Audit Log

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SAP Management Consoles – Account Payables
Focus on Automation, Tax Compliance and Supply Chain Finance
3 Way Match Required for Invoice
Approval for Payment
1. Receive Invoice from Supplier
2. Validate with SAT for Tax Compliance
3. Match to Goods Receipt, Purchase
Order
4. Automate “Okay to Pay”
5. Post FI Document with gov’t singing
attribute
6. Send status to supplier of payment
status & make invoice available for
financing

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Invoiceware Native SAP ERP Fiscal Reporting
Source Data Equals Transactions which Equals Reports

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Next Steps
Schedule a 30 Minute – Latin America Advisory Meeting
Join the Latin America Compliance Blog
Timing for a Multi-National
• 2016 Issues –
• Mexico eContabilidad & Complementos
• Brazil Destinatario
• Brazil SPED ECF, Block K, eSocial
• Uruguay & Peru 2016
• Ecuador – Offline Mandate by 2017
• Colombia Pilot started 4/2016
• Look at ERP Architecture
• What is implementation strategy
• Upgrade Strategy
• Are there consolidations