21st May 2014
Mexico has introduced mandatory electronic invoicing for individuals and businesses in a move that is fast becoming the standard for Latin America.
It means buyers and sellers have to register invoices with the tax authorities every time a transaction takes place. Some 4.2 million micro businesses are affected by the changes, which require them to report their revenues and costs to the tax authority every two months electronically.
While Mexico is pushing the mandatory e-invoicing policy forward into all areas of society and business, Latin America has for some time been a leading light in this field.
Chile pioneered e-invoices for businesses around ten years ago before the likes of Brazil, Mexico and Argentina made e-invoices compulsory for certain types of taxpayer. Chile is now mandating e-invoicing, too.
In September 2013, Chile’s tax authority, the Servicio de Impuestos Internos, announced plans to roll out mandatory e-invoicing for large enterprises with the aim of having all companies formally enrolled by 2017.
As The Economist points out, Mexico’s new rules, which took effect on April 1st, go the furthest as they apply to individuals as well as businesses. Many other countries in the region will follow suit, with Guatemala, Ecuador, Uruguay, and Peru expected to implement their own platforms in the next 18 months.
Fernando Martínez Coss from Mexico’s Tax Administration Service explained to the publication just how important the drive for limiting tax evasion is to the country. The SAT lost $3.4 billion between 2007 and 2009 to “apocryphal invoicing”, he said. E-invoicing will eliminate a significant amount of these losses.
E-invoices are seen as cheaper than paper-based processes, but the burden on the smallest firms can be great. Many lack the skills or even the computers required to comply. There are also issues around invoicing software provision and the penalties for failure to comply can be harsh.