Although electronic legal requirements are widely known nowadays, they spread through South America at a much earlier stage than they did in Europe. This can be explained by the large tax gap in these countries and the control on revenue and taxes that requirements such as e-invoicing offer. Because of the great successes in South America, more and more countries in Europe and all over the world are also introducing e-invoicing.
Mexico was one of those pioneers in south America, significantly lowering their tax gap. But Mexico decided not to stop at e-invoicing only. In 2018, Mexico made CFDI 3.3 mandatory. This includes requirements to digitalize documents such as invoices, payroll, incoming customer payments and deliveries.
CFDI stands for “Comprobante Fiscal Digital por Internet”, which means it concerns a digital fiscal document send over the internet. As mentioned in CFDI 3.3 there are multiple electronic requirements included, also known as the different comprobantes. These requirements are:
- I – Ingreso: which represents invoices and debit notes
- E – Egreso: which represents credit notes
- P – Pago: which stands for the payment complement also known as payment receipt
- T – Traslado: which represents the delivery note also known as freight note, E-Waybill or Transfer CFDI
- N – Nomina which represents the payroll reporting
Because these different types of documents are captured in one rule, namely CFDI 3.3, they have the same underlying XML scheme and have an almost identical process.
How should CFDI 3.3 documents be created and handled
For every invoice, credit note, payment receipt and for some deliveries you create in your ERP system, you need to create a CFDI 3.3. This is the XML format containing the data from your source document in a specific structure easy interpretable by computers and logic. As a next step, the CFDI 3.3 needs to be digitally signed to ensure that your company is the sender. This is mandatory data for validation by the Mexican SAT (Servicio de Administracion Tributaria). The signed XML is sent to a PAC (Proveedor Autorizado de Certificación) who is another mandatory step in the process. Only a PAC service provider is allowed to have direct communication with the Mexican tax authorities (SAT). The PAC gets in touch with the SAT to validate the document. In case of approval, the SAT will link a UUID (a universally unique identifier that contains the approval code) to the CFDI 3.3. Thanks to these UUIDs, the SAT can track all relevant CFDI documents (and their corresponding payments). In Mexico, UUIDs contain a code of 32 characters. In case of rejection, the SAT will link a rejection code to the XML file, indicating the reason for rejection. Next, the PAC receives the validated document in XML format from the SAT and the document is sent back through the chain. It is the CFDI 3.3 issuer who is responsible for sending the approved XML with UUID and its PDF to the customer. If the electronic document was rejected, you need to make the necessary changes and start the process again.
Why are the Mexican electronic requirements so tricky
The challenge is to choose a partner or a tool that can convert your document data in the required CFDI 3.3 format and to the company´s wishes and communicate it to a PAC.
An additional complexity of the CFDI 3.3 is the nature of the XML. Sometimes additional complements need to be filled (complemento de pago, complemento comercio exterior, complemento carta porte, etc.). Complements represent blocks of fields that provide information about a specific topic. An example is the payment complement (Complemento de Pago) that contains information about the payment and the cleared invoices. One aspect is knowing when and how to use these complements, but another aspect is how to integrate this into your technical solution.
Furthermore, CFDI 3.3 provides the option to work with a so-called “Addenda”. This is a section of the XML that enables you to add the information requested by your customer but is not mandatory by the SAT. Also, these requirements have to be collected and implemented.
Want to read more about Mexico's CFDI 3.3 regulations?
How SAP Document Compliance can help you to simplify, structure and comply with the Mexican legal regulations
SAP Document Compliance is also known as the SAP eDocument Solution. This is 100% integrated into SAP ECC and SAP S/4HANA. It provides a fully automated end-to-end solution for compliance with many country-specific legal requirements worldwide that make it mandatory for you as a company to issue transactional tax data in an electronic format and transmit this to the local tax authorities. As such, the E-Invoicing, E-Payment and E-Delivery regulations in Mexico are covered by this solution. But also e.g. SDI E-Invoicing in Italy, SII Reporting on VAT info in Spain, E-invoicing in Turkey, RTIR E-Invoicing in Hungary, and many more local requirements are covered. Therefore, this is a strategic SAP solution that ensures compliance in the long run and enables you to implement different country-specific legal requirements that can be managed and monitored from within its centralized, built-in SAP eDocument Cockpit.
For compliance with regulations in Mexico, SAP Document Compliance automatically converts the needed document into the required XML format by using so-called SAP eDocuments. In the next step, it is converted to the CFDI format and sent to SAP CPI. In SAP CPI, the CFDI is digitally signed, and this signed XML file will be (automatically) submitted to the PAC. The PAC will forward the CFDI to the SAT for approval. This covers the end-to-end process, which means that manual intervention is only needed in case of errors. Furthermore, all feedback (approvals/ rejections) from the SAT authorities is transmitted back into SAP ERP and shown within the central SAP eDocument Cockpit. As a result, you can monitor and follow up on the entire end-to-end process at a glance within the SAP eDocument Cockpit.
To ensure compliance with all those country-specific legal requirements worldwide, SAP has built its SAP Document Compliance solution around one core process flow that can be easily adapted for compliance with the individual country-specific, local specialties and requirements.