VAT Validation in Mexico: E-Invoicing Gets Complicated

It’s one thing to slam in an e-invoicing system and think you’re compliant with local regulation in Latin America. It’s another to actually be in compliance with tax regulations and bills given the real world challenges associated with accurate invoice and other documentation today. My colleagues at Spend Matters Mexico & Latin America recently welcomed a guest post on the subject.

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Starting with an analogy that “validating a tax bill is like brushing your teeth, everyone does it but not all do it correctly,” the article suggests that one of the underlying challenges has nothing to do with a lack of e-invoicing technology. Rather, it’s basic math. The author said their company had received “many invoices with basic math errors” that did not comply with regulations.

What are the most common challenges associated with rejection based on quantities?

First, “the multiplication of amounts” including “unit price per quantity” is key to address. Here, ERP systems often make the mistake of rounding numbers and “this is not compliant/correct.”

Second, consider the “application of discounts.” Here, discount structures are key and must be applied correctly to the total and subtotals.

Last, “taxes should be reviewed.” In these cases, taxes are not fully accounted or “properly combined.”

The combination of these mistakes can cause significant audit headaches!

So don’t simply think that Ariba, Basware, Tungsten, Coupa, Transcepta, InvoiceWare (a specialist in the region) or the myriad of other e-invoicing and P2P providers can solve your Mexican tax woes alone. Using poor data in e-invoicing systems will result in poor data that will not be in compliance with tax authorities.

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