Background
Tax Authorities' collection in Mexico for audit reasons has increased by 438% from 2014 to 2020
All this as a result of the application of intelligent algorithms to exploit the information in the CFD's and the monitoring and control of other obligations.
Changes in late 2021 and expected in 2022
•REPSE (Registry of Providers of Specialized Services and Specialized Works) (Mandatory as of 9/1/2021)
•Carta Porte Complement (Mandatory from 1/1/2022)
•CFDi 4.0 (Mandatory as of 1/1/2022 with co-existence until 4/30/2022)
•Payment Receipt 2.0 (Mandatory as of 1/1/2022 with co-existence until 4/30/2022)
•Receipt of Withholdings 2.0 (Mandatory as of 1/1/2022 with co-existence until 4/30/2022)
•New CFDI Cancellation model (Mandatory from 1/1/2022 with co-existence until 4/30/2022)
•RESICO (Simplified Trust Regime) (Available by 1/1/2022)
•Accountants must report to the Tax Administration Service (SAT) breaches of the companies they audit (Effective as of 1/1/2022)
•Maquiladoras will not be able to document compliance with transfer pricing obligations through Advance Price Agreements and the only valid mechanism will be known as “Safe Harbor”.
•Activities related to hydrocarbons will have greater controls and penalties for non-compliance with the obligations contained in the various tax laws that are applicable.
•Materiality, although it is not a new topic, the authority has been increasing the pressure on this matter
Let's review some of them to get a better understanding about why all taxpayers in Mexico should be getting ready for 2022 challenges.
REPSE’s
As of September 1, 2021, the subcontracting of services directly related to the predominant activity of the contractor is prohibited.
Other services may be contracted, but it will be necessary to register the specialized provider with STPS and fulfil multiple requirements.
Failure to comply with the registration entails fines for both the contractor and the supplier of between 2,000 and 50,000 UMAS (179.00 to 4'481,000 MxP)
The contractor also acquires the commitment of “Obligado Solidario” and must respond to the subcontracted employees if the REPSE fails to fulfill its obligation.
And last but not least, the expenses related to this REPSE would become non-deductible and non-creditable.
Carta Porte
As of January 1st. 2022, it is mandatory to prepare and accompany all merchandise being transported through the Mexican territory with a CFDi with Carta Porte Complement. This requirement applies to transportation by any means, whether by road, air, sea, or rail.
If the taxpayer transports the goods by its own means, he will be responsible for issuing a Income type CFDi, but if he uses the services of a carrier, the carrier will be the one who will issue Transportation type CFDi.
Non-compliance in the presentation of this complement will have a hard impact mainly for the owner of the merchandise due to the following:
•The expense of the transportation of goods would become non-deductible
•The VAT associated with transport costs would become non-creditable
•Raw materials and Products detained and / or seized, causing:
•Delays in the Productive and Commercial processes
•Possible loss of contracts
•Damage to the corporate image
CFDi 4.0
As of April 30, it is mandatory to be able to issue tax documents according to the new structure of CFDi (all), Payment Receipt, Withholding Receipt, and Cancellations; but since it is possible some taxpayers are ready earlier, the systems should be ready to receive and process documents 3.3 and 4.0 within the period of 1/1/2022 and 4/30/2022
Invoices reception and Materiality
Since the launch of the CFDi, it has been critical to check that the documents received from suppliers are fiscally valid before entering them into the supplier payment process to avoid the processing of invalid documents.
From an operational point of view, it is necessary to automate the receipt and processing of invoices, eliminating manual data entry and increasing controls to reduce administrative costs.
Regarding materiality, it is no longer enough for taxpayers to find suppliers that deliver quality materials with the best prices and delivery models. Now the authority has transferred the audit obligation to taxpayers.
In other words, to avoid tax risks, taxpayers must now perform various validations not only on the documents received, but also on the tax and operational situation of the providers, of which it will also be necessary to collect evidence.
First of all, it is required to validate that the provider is not already classified as EFOS (Company that Invoices Simulated Operations) on the blacklist of the SAT (Art 69B). If, being the supplier classified as EFOS, the commercial activity is carried out, automatically the client becomes an EDOS (Company that Deducts Simulated Operations), an automatic target for the Tax Authorities.
In the blacklist of Art 69B there are also taxpayers not located by the authority and those who at the discretion of the authority do not demonstrate having the infrastructure, assets, personnel, and direct and indirect capacity to lend, produce, commercialize, and deliver the goods. and / or services.
As this status can change over time, it becomes mandatory to collect evidence that while the commercial relationship existed, the fiscal and operational status of the supplier is acceptable under the authority's standards. If a provider is included in the blacklist, and there is no evidence acceptable to the authority, the expense and VAT associated with the provider in question would become non-deductible and non-creditable, and additionally exposed to fines for surcharges and updates which could reach 100% of the cost of the provider's services or products.
The authority regularly accepts internal documents as evidence as long as they are protected by an electronic seal (Certain Date) that makes them unalterable. Some of the documents accepted by the SAT are Constitutive Act, Financial statements, Bank account statements, Logs, E-mails, Advertising, Purchase orders, Contracts, Attendance lists, Flow charts showing the production processes, Plans and photographic files, and Tax files.