New Regulations on Electronic Accounting

issued by Mexican Tax Authorities (SAT)

Electronic Accounting

Contents

Who must comply?

Who is exempt from filing?

What information must be sent?

When should it be sent?

1

2

3

4

5 How often should information be sent?

6

7

8

How to prepare information for filing?

9

Contents of Files.

10 Suggested methodology. Common challenges.

How to send information?

Penalties for non-compliance.

Electronic Accounting

Who must comply?

From January 1, 2015, all

Corporations, including Non-profit

Corporate Entities and Individuals,

must keep electronic accounting

records and send this information to

the SAT on a regular basis.

Electronic Accounting

Who is exempt from filing?

Workers’ unions and their affiliate bodies, as well as the federal, state

and municipal governments and any institutions which are legally

required to return the full amount of their operational surplus to the

federal government, and individuals whose income from the

immediately preceding year did not exceed two million MXN, who use

the “Mis cuentas” function, or who are currently covered by the Fiscal

Incorporation scheme.

Electronic Accounting

What information must be sent?

A. Chart of accounts (To be filed one time at the start and every time there is a change).

B. Trial balance (To be filed monthly) including initial balances, period transactions and final balances for each and every account including assets, liabilities, equity, P&L, and memo accounts. C. Journal entries (To be filed when requested by the SAT) including the details of each transaction such as account, sub-account, and payment information.

Electronic Accounting

When should it be sent?

Trial Balance for the month of: Submit by: *

July January 2015

August January 2015

September and October January 2015

November and December January 2015

Individuals will begin filing as of January 2015 as well.

* Obligation for all months has been recently pushed back to January 2015.

Electronic Accounting

How often should information be sent?

Journal entries are to be filed when required by the authority (tax audits, tax refunds, tax compensations, etc.) (rule I.2.8.8).

Document Submission Date

Chart of Accounts Only once with the first filing, and each time

changes are made.

Monthly Trial Balance

Corporations, by the 25th of the month immediately following.

Individuals, by the 27th of the month immediately following.

End-of-Year Trial Balance

Corporations, by April 20th of the year immediately following.

Individuals, by May 22nd of the year immediately following.

Electronic Accounting

How to send information?

1.- Sign into the Taxpayer Inbox (“Buzón Tributario”)

2.- Click on Electronic Accounting (“Contabilidad Electrónica”)

3.- Select the kind of information and file to be sent, together with the relevant general information.

4.- Send using electronic signature.

Note: * If you complete the filing successfully, you will receive a confirmation email. If not, or if there are code errors in the files, you will receive an alert in your Taxpayer Inbox, notifying you to make necessary corrections and complete a new filing within the next three business days.

Electronic Accounting

How to prepare information for filing?

Create XML files with the details from

electronic accounting documents in

accordance with what is set out in Rule

I.2.8.6 Appendix 24 of the Second

resolution on modifications to the Fiscal

Matters Resolution 2014. Compress

each file using Zip format.

Electronic Accounting

Contents of Files

• RFC (Taxpayer ID code: 12 digits for corporations and

13 digits for individuals)

• Year (Year corresponding to the information)

• Month (Month corresponding to the information)

• Identifier (CT= CHART OF ACCOUNTS, PL= JOURNAL

ENTRIES, BN=NORMAL TRIAL BALANCE, BC=

COMPLEMENTARY TRIAL BALANCE)

• XML conversion(.xml)

• Compression (zip)

Electronic Accounting

What are the penalties for non-compliance?

Article 84 of the Federal Tax Code (“CFF”) establishes a fine of between 1,200 and 11,960 MXN for taxpayers who fail to file electronic accounting. The penalty will be between 260 and 5,980 MXN for those who do not keep a special book or registry of income and expenses as required by Law, and also for those who do their accounting in a different way or in different places to those established by the CFF. For taxpayers whose accounting entries do not correspond to operations carried out, or are incomplete, inaccurate or submitted after the deadline, a fine of between 260 and 4,790 MXN will be applied. The fine for not keeping Accounting records available to the authorities for the established amount of time will be between 730 and 9,560 MXN.

Electronic Accounting

Challenges for Companies

Lack of resources to drive the implementation of this new regulation on time. Lack of alignment between own trial balance and the Grouping Catalog prescribed by the SAT. Tax accounting inconsistent with the level of detail required by the Grouping Catalog prescribed by the SAT. Current Accounting System does not offer the functionality to issue XML files for Chart of Accounts, Trial Balance and Journal Entries in an automated fashion. Journal entries do not contain the level of detail required by the SAT. Lack of training to current Accounting Staff to ensure proper compliance with this new regulation.

Electronic Accounting

Suggested Compliance Methodology

ASSESSMENT IMPLEMENTATION TESTING GO LIVE

Understanding of current environment: Systems, Accounting practices, Taxes

Identification of gaps versus rules prescribed by the SAT.

Detailed implementation plan

Make required changes to close gaps versus rules prescribed by the SAT:

Chart of Accounts

Trial Balance

Journal entries

XLM files

Perform tests of XLM reports as required to be submitted by the SAT regulations.

Ensure data is accurate, complete, and consistent.

If possible, automate this process.

Be ready for first reports to be filed in January 2015.

TRANING PROGRAM

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