On October 29, 2013, the Mexican government published reforms to the Federal Tax Code—specifically Article 28, Fraction IV—requiring taxpayers to electronically submit monthly accounting information in accordance with rules to be published in the first part of 2014.
In the April 2, 2014, edition of the Official Gazette, the government published additional regulations related to this new obligation in which it detailed what should be considered accounting information for legal purposes.
The new amendments detail the required accounting information that must be electronically uploaded to the Tax Administration Service (SAT) Internet portal beginning July 1.
The following accounting documents and information must be submitted:
- All journal entries, including the chart of accounts
- Notices filed with the SAT to obtain a Tax ID, including modifications such as domicile changes or opening of branch offices or warehouses
- All required annual and monthly tax and information returns as well as any other tax return filed to amend information already filed as a result of a tax audit, errors, etc.
- Bank statements, including bank reconciliations as well as any statements related to corporate credit cards, food and gas coupons, etc.
- Shares and ownership interests, including notes receivable owned by the taxpayer
- All documentation related to registration of employees before the Mexican Social Security system, including payments made by the taxpayer to the Social Security system
- All supporting documentation related to the taxpayer’s imports and exports
- All supporting documentation and information related to taxpayer transactions, which must be recorded in the proper company’s internal systems
- Any other required tax return
All accounting transactions or journal entries should meet the following requirements:
- Posted in the accounting records within five days of the transaction; these postings should be very detailed
- Recorded in the accounting journal in a descriptive way and in chronological order, indicating the corresponding debit and credit; all accounts must show the balance at the beginning of the corresponding period, the total amount of all debits and credits for each account for the corresponding period and the ending balance; the taxpayer is allowed to keep separate records by establishment, branch, product or cost center, although the taxpayer must keep consolidating records for these separate financial entities or reporting units
- Include identification of each transaction, act or activity and its characteristics using folios, invoice number, voucher number, etc., so the payment method, corresponding tax rate and withholding tax can be identified
- Allow identification of investments with supporting documentation and acquisition date
- Organized so resulting balances can be obtained by account
- Issue statements of financial position, income, changes in stockholders’ equity, origin and application of resources, etc.
- Link accounts to the corresponding financial statements
- Identify taxes and contributions that should be canceled or refunded as well as benefits and tax credits received by the taxpayer
- Offer proof that requirements for tax incentives or subsidies received by the taxpayer have been fulfilled
- Identify assets, distinguishing between those acquired or produced, for raw materials and finished or semifinished products as well as indicating whether they are intended for sale, donation or destruction
- Information and data for supporting documentation in languages other than Spanish or values disclosed in foreign currency should be accompanied by corresponding translation and exchange rate used for each operation
- Sortable by cost centers, identifying transactions, acts or activities of each branch or establishment, including those outside Mexico
The remaining requirements listed in the regulations describe accounting information details common in Mexican accounting systems.
Specific information about how this accounting information should be uploaded to the SAT Internet portal has not been published, so taxpayers must wait to see if their accounting systems will facilitate uploading of their information once all other aforementioned requirements are met.
Companies and taxpayers using accounting systems that are part of an ERP environment housed outside Mexico and run in English should review their specific situation and determine how they will comply with this new obligation.
Under the current regulations, the accounting uploading process should occur in early August 2014.
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Rob Wagner, BKD, LLP, with Raul Montemayor, Omar Garcia & Luis Vazquez, Mazars Mexico
This information was written by qualified, experienced BKD professionals, but applying specific information to your situation requires careful consideration of facts and circumstances. Consult your BKD advisor before acting on any matter covered here.
Article reprinted with permission from BKD, LLP, bkd.com. All rights reserved.
