Mexican legislation mandates the use of electronic invoices throughout the supply chain. Failure to comply with the appropriate laws can be considered tax evasion, punishable with penalties that may exceed the value of the transaction in question. If you're doing business in Mexico, it's crucial that you comply with the appropriate laws. Follow these steps to make sure you're covered with all your transactions in Mexico.
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If you're setting up business in Mexico for the first time, there are a few essential applications that you must complete to ensure your tax compliance. First, you need to get a Mexican Tax ID (RFC). Once you have this, you can apply for the Advanced Electronic Signature (FIEL). This electronic signature helps to identify you within the Mexican tax system.
Using your FIEL, you can apply for a Digital Seal Certificate (CSD). You will need to apply your CSD to all your Digital Fiscal Documents through Internet (CFDIs) when you send them to your Authorized Certification Provider (PAC).
Choose a CFDI Solution Provider
The Mexican Tax Administration Service (SAT) mandates that businesses use electronic invoicing for their activities. Electronic invoices must be completed in both an XML file and a PDF. There are many detailed requirements that apply to every invoice produced. On December 1, 2017, the SAT implemented a new version of the CFDI which includes over 52,000 product and service specifications that taxpayers must select from when properly identifying list items and unit measurements on each invoice.
Producing electronic invoices that are in proper compliance with Mexico's legislation can seem overwhelming, but the right service provider can dramatically simplify the process. Sage X3 features an electronic invoice setup, intuitive tabs modules, and helpful sales and purchases reports that make it easier to meet the demands of the SAT.
Select a PAC
Your PAC is the certification provider who will validate and certify your CFDIs. The PAC is essentially responsible for signing documents on behalf of the government. Your PAC provider does only a small portion of the work associated with properly preparing and filing your tax documents. Though this simple signing service does just a fraction of the work associated with preparing and processing CFDIs, it can still play a major role in whether your business succeeds or fails.
When choosing a PAC, you should always inquire about their contingency plan. What happens if their signing service experiences technical difficulties? If there is no backup plan in place, you can suffer serious setbacks in shipping and production. Inquire about the channels of communication to make sure your information is secure. The right PAC is fast, safe, and reliable.
Mexico's changing CFDI regulations can present a challenge to business owners. Fortunately, there are many smart pieces of software that can help streamline invoicing for you. The Mexican Fiscal Requirements Enhancement for Sage Enterprise Management is specifically designed to help you clear any hurdles the country's tax requirements may put in your way. This software can even connect to any PAC you choose to help you get the final stamp of approval on your essential documents.