Some new features of the SAT

I was fortunate to attend to the First international Forum of Tax Administration and E-invoice developed in July 2014 in the city of Cancun, Quintana Roo, where I was invited to participate in a couple of panels. The Forum responded to a joint initiative between the Tax Administration of Mexico – SAT, and the Mexican Association of Authorization and Certification Services Providers- AMEXIPAC services. It is not common to see efforts of this type in which the Administration cooperate so closely with representatives of the private sector in the pursuit of a common goal. It is the case in Mexico, where the implementation model of electronic invoicing, called Digital Tax Voucher, is consolidated with the participation of private companies that provide services of documents certification.

These companies, called PAC, have developed their business on the basis of an invoices certification service and other value-added services that allow to stand out from the competition. In the Mexican model, taxpayers that issue electronic invoices must certify them online to validate both the minimum business conditions and rules, and the signatures and certificates used. This certification is completed by one of the authorized PAC which returns the certification to the taxpayer, who continue with the processes. THE SAT requires PACs to provide a basic and free service at least for small taxpayers so that they can be users of the electronic billing system without incurring higher costs. The PAC certainly provide that minimum service and in general we could say that it is very minimal. Their commercial strategy, legitimate in my view, is offering at least a range of more complete, simple and powerful services that can range from mobile application support for use in shops to retail at any point up to the storage of documents and direct integration with the ERP tools used by the company, through the integration of interoperability of different participants in the chain of value and financial operations which I will discuss in an upcoming post. The PAC, which certainly can be specialized in market segments, offer their customers and taxpayers of the SAT, services throughout their business cycle: reception of electronic orders, purchase orders, inventory check, shipping and shipping notices, good receipts notification, electronic payments, electronic confirmation of payments, electronic listings of payment agendas, etc.

The inauguration of the Forum was conducted by Aristóteles Núñez, Director of the SAT. During his short but magnificent speech he described briefly some of the great achievements of the SAT in the last decade and some of the enormous challenges on which the organization is currently concentrating. In his presentation Aristóteles clearly expressed his desire that experiences, achievements, and lessons be shared and known by other actors, in particular by other tax administrators, so I would like to mention here some of those achievements and challenges:

• • E-invoicing in Mexico is a consolidated reality. It is now mandatory for all taxpayers. It is not only obligatory for large taxpayers, or for those who sell over one certain value, or for who develops some specific economic activity. It is simply mandatory for all. The process is gradual, but advances and achievements are undeniable. Some numbers: currently more than twelve billion tax vouchers have been issued, all held by the SAT; the number of issuers exceeds three million three hundred thousand; in recent months more than four hundred million documents per month have been received and certified.

To compare a little the growth figures we can comment that 119 million electronic invoices have been issued in the year 2011; between January and June 2014, 2400 million documents have been certified. Currently 78 PAC are authorized for the certification process.

• In June 2014 a new massive service was opened to taxpayers: the electronic mailbox. The mechanism will allow taxpayers to have access to all related electronic documents that SAT can may generate about them.
• It is also initiating the process, which is expected to become massive very quickly, of mandatory standard electronic accounting for all taxpayers.
• In tax administration, the next stage is the implementation of electronic controls and audits, which will of course be supported by the electronic registration of taxpayers, electronic returns, electronic tax receipts, electronic tax vouchers and electronic processes.
• The last reform in Mexico includes some significant elements which deserve to be commented:
• No expenditure in Mexico may be deductible for income tax purposes except if supported by an electronic invoice. Apart from commercial transactions today in Mexico the payroll is stamped, with details of deductions and contributions to social security, bank account statements, donations, etc.
• A mechanism is implemented that allows a conclusive agreement with the authority, initiated by the taxpayer, with the presence of the defender of the taxpayer, and once agreed, it will have of final and binding character as accepted by the parties, eliminating the possibility of continuing the litigation at later stages. Initial data show a 75% effective rate. It does not mean that any of the parties was absolutely right, but where it has been applied, the differences could be clarified with mutual acceptance. In comparison, in the long process of earlier litigation, a little more than half of the cases ended up favoring the Administration, after, in general, years of litigation, but from such cases only two percent could be fully recovered.
• The criterion of tax reserve is a benefit of taxpayers. This benefit does not extend to non-taxpayers. In the case of outstanding debt, their data are published with their number and name so that other economic actors can assess the risks of doing business with delinquent taxpayers. To date, data from 113 thousand debtors have been published.
• The SAT is working on a scheme of electronic signature with authentication and non-repudiation features without requiring additional hardware devices which will allow to significantly expand the connection possibilities. An alternative will probably include the addition of a phone line providing a code to be used in each separate transaction via SMS or an application.
• The Mexican State, not just the SAT, are working on a project to develop a single site from where all the procedures existing in Mexico could be performed. It is expected that the Government subsidize the cost of the mobile Internet to enable all citizens to access this site.

Aristóteles referred to this path by the SAT in the last ten years, as a bold adventure; on the amount of development undertook by SAT he would say that they had all a common adjective: “electronic”. These expressions are those that inspired the title of this post. Congratulations to the SAT.

Good luck

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