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E-Accounting Requirements in Mexico

E-Accounting Requirements in Mexico

The issue of the implementation of e-accounting requirements in Mexico is not entirely settled. Learn why by listening to this Tecma Talk podcast.

Tecma Group of Companies:

Hello and welcome to another informative installation of Tecma Talk podcasts during which the Tecma Group presents information that is on topics related to manufacturing in Mexico. Hopefully you will find that podcast and all of the others that are on our website to be relative and informative in terms of the information that they provide. Today we have an internal expert with us. His name is Sergio Vazquez, and Sergio is the director of finance. The topic that we are going to be looking at today has to do with recent requirements that were put into place by the Mexican government, which require businesses to e-file tax information in Mexico. Sergio how are you today?

Sergio Vazquez:

Good. Great.

Tecma Group of Companies:

Sergio, as the director of finance for Tecma, you have a wide range of information and knowledge concerning the taxation of business. Given this new requirement that Mexico’s tax authorities have put into place, can you give us an overview in terms of what the major obligations for e-accounting requirements in Mexico?

Sergio Vazquez:

Yes, in December of 2013, the Mexican government published a lot of reforms that involved a lot of sectors and a lot of different topics. One of them is e-accounting requirements in Mexico. Basically, what this means is that most of the taxpayers are going to be obligated to submit, in a very easy to read format which is called an xml type of file, information about their general ledger to the government on a monthly basis, trial balance and basic accounting reports on a monthly basis. In addition to that, they have set up a general layout that all the companies should standardize in order to be able to read all of the trial balances and charts of account of a particular company. There is a hope that every company is going to adapt their chart of accounts to this generic chart of accounts that the tax authority has published. It is going to produce a continuing obligation to start making monthly submissions of all accounting records to the tax authority.

Tecma Group of Companies:

What is the purpose of the government having put into place e-accounting requirements in Mexico of the type that you are describing?

Sergio Vazquez:

The reason for this, according to the government, is that Mexico is part of the OECD (Organization for Economic Cooperation and Development), and this organization has given recommendations to the Mexican government to boost the percentage of public collection. The Mexican government has not been doing a very good job in terms of tax collection as a percentage of the country’s Gross Domestic Product (GDP). The purpose of a-accounting requirements in Mexico is to increase the percentage of public revenues to a level that is acceptable from the perspective of the OECD. This means that all the information that is going to be submitted on a monthly basis is going to give the authorities a lot of tools to audit and to review, and potentially bring additional revenue into the public treasury. This will probably be the most successful tool that the government can use to increase revenues.

Tecma Group of Companies:

How are these changes in e-accounting requirements in Mexico going to be implemented in practice?

Sergio Vazquez:

This is not a change that is easy to implement the government has understood, and by the way they were not ready. I have heard that the current delay was because the government was not ready. What I am saying that the original regulation established a due date of July of 2014. Back in 2013, the new e-accounting regulations in Mexico stated that everyone should start sending their information in July 2014. When July arrived the government was not ready. They then published a delay from July to October. They did not move the required reporting periods, but they did delay the effective date of the submission of the information. When October came to implement the e-accounting requirements in Mexico, they were not ready at that time either. Now the current regulation says “forget about 2014, let’s start let’s start with January 2015,” and let’s have the submission on the third day of the month three months after. This means that January will be reported on the third of March and February will be reported on the third of April. This gives companies three days after the beginning of a month to comply with e-accounting regulations in Mexico.

Tecma Group of Companies:

Yesterday, (January 26, 2015), there was an article in one of the major Mexican newspapers that went even a bit further than what it is that you are describing. It stated that many of the businesses that are smaller in size do not yet have the IT capability to be able to participate in this, and that they granted a further extension on e-accounting requirements in Mexico to smaller sized businesses in terms of submitting their information. They are giving until the beginning of 2016 to commence. Do you know anything about this, and could you explain?

Sergio Vazquez:

Yes, there have been a lot of delays in implementing compliance, but there are also some exception to these obligations. At the same time the government is implementing a news system to help people comply with e-accounting requirements in Mexico. It is called “My Accounts,” or “Mis Cuentas,” in Spanish. This is going to be used by all of the people that have never reported revenues for tax purposes in the formal sector of the economy. People that have never paid any taxes are being offered this system. It is free. It is accessible at the Mexican government’s webpage. All the people that will be using this tool are exempt from sending their accounting electronically. This is very simple because they will use “Mis Cuentas” to submit information that they will not need to send again. Other than that, the rest of the taxpayers will, sooner or later, be obligated to fulfill the e-accounting requirements in Mexico sometime this year, unless they have opened up operations in 2014 or 2015. These taxpayers that are relatively new will start submitting their information at they beginning of 2016. So, they have a two year time frame for exemption.

Tecma Group of Companies:

New businesses, obviously, have been given time in order to enable them to comply with the government’s e-accounting requirements in Mexico. You mentioned that even these businesses will be subject to the new rules, but are there any other options available to the Mexican taxpayer?

Sergio Vazquez:

There is one exit that is still available to the taxpayer. In Spanish this is called the “amparo,” which is a type of lawsuit in Mexico. I believe that a lot of Mexican taxpayers have filed amparos in opposition to the law. What I have heard from big firms is that there is a very good chance, or possibility, that the courts will come to a resolution of the issue that is favorable to the taxpayers. The argument is that there is a loss of privacy under these e-accounting requirements in Mexico. The contention is that the authorities have other means available of doing their reviews and their audits. The contention is that doing the process in the proposed manner will expose a lot of taxpayer private information. Again,the experts believe that the amparos that have been filed will be decided for the benefit of the taxpayers.

Basically the lawsuit (amparo) is made up of two steps:

(1) A party alleges that the law is unfair, and requests that, whatever happens compliance is not required until the final decision is taken, or (the case has been decided). In late November 2014,the Mexican Supreme Court issued the first suspension of all obligations.
(2) This means that all the people that filed the amparos have the right to not submit any information until the whole Mexican amparo process is finished. We have, as I mentioned before, the expectation that the end of the amparo process will be forthcoming by year’s end. In the meantime we will wait until the end with the expectation that the result is a good one.

The Tecma Group of Companies:

There are still some moving parts that are still not settle as regards the issue of e-accounting requirements in Mexico. It looks as though we’ll have to wait and see what the decision is in June. Maybe at that time we can do another podcast with you to discuss what happened in the Mexican courts? In case their are listeners that may have question on this, or even other, topic(s) would you be willing to field emails from them, the listeners?

Sergio Vazquez:

Yes, absolutely.

Tecma Group of Companies:

What is your email address, Sergio?

Sergio Vazquez:

My email is sergio.vazquez@tecma.com

Tecma Group of Companies:

Sergio, thank you as always for talking to us about issues that have to do with finance as it relates to manufacturing in Mexico, and we look forward to speaking with you in continuance of exploring this particular topic. Have a great day.

Sergio Vazquez:

Your welcome. Have a great day.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interested parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

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