Mexico Announces Electronic Audits in 2016

Scott Lewin
March 3, 2016

This blog was last updated on March 3, 2016

The culmination of Mexico’s e-invoicing and e-accounting mandates begins as of September 2016 in the form of electronic audits. Now that the government has standardized invoicing and reporting formats, electronic audits are a natural transition designed to further increase Mexico’s tax revenues. 

Simply by closing the leaks in its tax collection processes with greater visibility into corporate financial transactions, Mexico has already increased tax revenues by 34 percent without raising tax rates. Now with the move to electronic audits, the SAT (Mexico’s tax authority) is poised to improve its collections even further while reducing the labor and costs associated with the audit process. 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 began launching these electronic audits in September, with the expectation of 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.Moving to electronic audits to verify a company’s reports is the third-prong in Mexico’s approach to eliminating fraud and closing loopholes to maximize its tax revenues. With this move to automated audits, companies operating in Mexico must first ensure that they have a comprehensive compliance solution that operates within their existing ERP to eliminate the risk of discrepancies inherent with using a third-party system. Then, they need to update and automate their processes and procedures to eliminate error risk. For example, manual accounts payable processes are error-prone. We’ve found that as many as 10% of XML invoices don’t match PDF records – a certain audit trigger – which is why the move to automated accounts payable is a crucial step in order to avoid electronic audits.

As the Mexico SAT gears up for this new audit approach, companies should be evaluating their compliance approach in Mexico to ensure they aren’t at risk of triggering these electronic audits, and that they have the appropriate records if an audit is conducted.

Listen to webinar replay “Electronic Audits and e-Invoicing CFDI 3.3 upgrade expected in Mexico: Are you prepared?” and make sure you are prepared for these changes. Listen to webinar.  

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Scott Lewin

Gain timely insight and important up to the minute information about the current legislative changes in Latin America, including Brazil Nota Fiscal, Mexico CFDI, Argentina AFIP and Chile DTE. Learn how these changes affect your operations, your finances and also your Information Technology teams.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]

reporting unclaimed property
North America Unclaimed Property
October 21, 2024
Three Key Reminders for Businesses Reporting Unclaimed Property

This blog was last updated on October 21, 2024 Unclaimed property compliance is one of those legal obligations that often flies under the radar for many businesses, especially smaller ones. However, failing to stay compliant can quickly turn minor oversights into major liabilities. In many cases, the penalties far exceed the value of the property […]