Invoicing, Accounting, and Tax Compliance in Mexico

Mexico, like many of its Latin American neighbors, relies on a value-added tax, or VAT, to raise a substantial portion of its government revenue. The VAT essentially requires companies to act as tax collectors on their own transactions, so it relies on accurate invoicing to confirm proper remittances.

In recent years, Mexican tax authorities have increasingly turned to electronic solutions to detect errors and/or fraud in tax reporting, and have promulgated e-invoicing and e-accounting regulations aimed at increasing the efficiency of government audits. These efforts have clearly paid off, resulting in a 34 percent increase in VAT collections in just a single quarter.¹

Independent of their success in raising revenue, Mexico’s e-invoicing and e-accounting regulations also have far-reaching implications for business conduct in the country. In recent years, both Mexican citizens and the international community have called for increased transparency into flows of money both into and out of the Mexican treasury and marketplace. The government’s increased focus on accurate financial reporting for tax purposes has helped to foster an environment that encourages—and rewards—diligent corporate self-monitoring.

Notwithstanding the initial burden of implementing automated solutions in accordance with Mexican e-invoicing and e-accounting requirements, companies are apt to enjoy opportunities to reduce costs and regulatory exposure along the way.