Mexico’s tax authority, the SAT, announced its implementation of real-time, electronic audits earlier this year. Since going live with this initiative in September, it recently issued a new statement regarding its progress and goals for the program. Designed to speed up the auditing process and minimize the time it takes for taxpayers to correct compliance errors, and therefore pay appropriate taxes and fines, the SAT expects to complete 3,000 electronic audits this year. It estimates the average time for an electronic audit and subsequent corrections to be just 4 months, while traditional audits average 1 year. To learn more, please plan to join us for a webinar on Thursday, December 15th at 12pm ET on “How to Prepare Prepare for Compliance Changes in Mexico and Colombia.”
In addition to speed, the SAT cites several benefits that these electronic audits will offer companies in its latest announcement about the initiative:
- E-audits are less intrusive, as they will only focus on specific irregularities instead of the enterprise’s full accounting records.
- These audits reduce fiscal compliance costs by eliminating the need to go to the SAT office for fiscal assistance. Communication can now all be done electronically through buzon tributario (an electronic mailbox for tax and compliance-related correspondence).
- The buzon tributario also results in more transparent communication between taxpayers and the fiscal authority.
Despite these benefits, one critical risk is clear: with real-time electronic audits, errors will not slip through cracks. The SAT has created savvy processes for identifying discrepancies and immediately taking action to get to the bottom of the errors. Specifically, it will look for irregularities between tax liabilities reported in electronic documentation and what’s actually paid. The SAT will compare e-invoices and accounting records from both the enterprise itself in addition to vendors and suppliers – as well as incorrect tax calculations and omissions. And regardless of whether there was a simple typo, an honest mistake or an actual deception, errors of any kind will result in penalties, which can add up to more than $4,000 per invoice that includes an error or does not match eAccounting records. (Check out country-specific fines and penalties in our tip sheet.)
In its guide to preparing for these e-audits in Mexico, EY outlined several necessities. “Automated processes, specific tools and formats, tracking and matching of invoices, validation reports, data security, and comprehensive analytics are some of the demands that e-audits are now placing on taxpayers’ systems and operations.” Companies must also have accurate, accessible records in order to defend inconsistencies in the event of an electronic audit. To learn how Sovos is helping clients enact these requirements and safeguard against electronic audits in Mexico, contact us.