e-Invoicing in Mexico: the inside track
We have attended many e-Invoicing events and have listened to numerous government advocacy groups talk about the promotion of electronic invoices. In Europe, e've seen governments mandate the use of electronic invoices to their suppliers and select a few service providers to work with (without tendering European-wide to give everyone a chance to participate) or mandate e-Invoicing to their suppliers using methods that contradict existing standards.
Yesterday, we witnessed something unparalleled.
In Mexico, nine years into its e-Invoicing mandate, the national association of service providers, AMEXIPAC, held a meeting to discuss the next steps for the ‘factura electrónica’. The agenda featured the who’s who of the Mexican market: service providers, including our partner Buzón E, end users, the 'big four' consulting firms and the Mexican Tax Administration (SAT).
To be honest, we were bracing for a rather boring day, given our experiences from similar events in Europe.
Little did we know.
The latest announcement… archiving
What happened took even the local service provider community by surprise. Yes, everyone knew that the government would abolish supplier-generated invoices (CFDs) and would enforce the use of invoices created by certified service providers (CFDIs). We also knew that the government would lower the mandate’s threshold so that even more companies in the Mexican market – those with a turnover of more than USD$20,000 – will have to move to electronic invoicing from January 2014.
The surprise came when the SAT representative announced that the Mexican government intends to become the storage facility for all legal invoices in the market. This is a big step towards real-time auditing and removes the possibility for anybody to tamper with stored invoices.
This move will allow the government to reconcile stored invoices against a company’s filed tax returns. Tax payers will be able to access their invoices online through apps that the government will create, which made me smile as most governments shy away from new technology like this.
The driver behind all these developments is simple: to prevent fraud.
In Mexico, the so-called ’informal economy’ equals the legal economy in size, but as it doesn’t raise invoices, it doesn’t pay taxes. There lies a big challenge ahead. How do you change the culture of a country that is used to selling the fruit it harvests by the side of the road? At the moment, no invoices are raised for such trading.
The tax administrator summarised the government’s intentions in sharp words, "Mexico needs a stable fiscal policy and budget to survive in the global market. All processes have to be optimised to reap all the benefits." And while some consultants in the room raised concerns about invoice availability in the archive they also knew that they were looking at a large consulting nirvana. The majority of people in the audience, me included, were excited by the government’s enthusiasm.
This was when we realised that Europe really is a laggard. Countries such as Mexico may still be considered an emerging market but as a younger generation it is more agile in its approach and thinking. In contrast, the EU often reminds me of a retirement home where innovative thinking is limited to how new taxes can be created rather than ways to use existing tax revenues more effectively.