In 2015, the Mexican Tax Administration Service (SAT) implemented a mandatory electronic accounting system for the financial sector. This affects corporations and individuals with incomes over four million Mexican pesos. The electronic accounting system obliges individuals and businesses to carry out their monthly accounting records electronically.
In 2016, this obligation was extended to:
- Taxpayers with an income of less than four million pesos of taxable revenue for 2013
- Taxpayers engaged in farming, forestry or fishing
- Non-profit taxpayers
- Taxpayers who have signed the Federal Taxpayers Registry (RFC) in 2014, 2015 and 2016.
Those exempt from performing electronic accounting are:
- Workers with a salary
- Taxpayers who register their operations in the portal “My Accounts” in SAT
Mexican Tax Audits
It is worth mentioning that those who fail to comply with sending electronic accounting will be fined between $ 5000 and $ 15000 MXN. The implementation of this system goes hand in hand with an increase in electronic audits in August this year, especially those related to actions erosion of the tax base and the transfer of profits. The fight against Base Erosion and Profit Shifting (BEPS) is an international initiative that seeks to combat tax evasion of large companies. It is led by the Organisation for Economic Co-operation and Development (OECD) and the leaders of the Group of 20 (G20).
If SAT identifies any irregularities in the accounts or determines that there are tax omissions, the company will be notified that an an audit will need to occur. The taxpayer will be notified through the tax mailbox and after that, an electronic review will be performed. Once the taxpayer sees the resolution of SAT, they will have two alternatives; pay the tax online or submit the relevant explanatory as a form of appeal. The taxpayer has 15 days to submit the necessary documentation in order to prove their innocence. If evidence is presented, SAT will have 40 days to issue and notify the resolution. It is worth noting that there will be sanctions for those taxpayers who ignore their tax mailbox. In fact, when SAT sends a message and the taxpayer does not read it, is is considered to be read on the 4th day, even if it has not been opened.
It is important that all Mexican taxpayers, whether individuals or companies, know and understand their accounting and tax obligations. It is also important to know the steps to follow in case of being audited to avoid errors and additional sanctions. It is recommended that you seek advice from experts to protect your interests, clarify doubts and evaluate your tax situation.
At Biz Latin Hub, our team of experts know all the accounting and tax regulations in Mexico and can help your company with financial reporting and to minimize risk and maximize efficiency in your Mexican operations. Don´t hesitate to get in contact with Alex here.