VAT Number Format In Mexico

Mexican VAT number contains 3 digits, 6 numbers, and 3 digits. (e.g., ABC123456A12).

VAT Rates In Mexico

The standard VAT rate in Mexico is 16%, with some services exempt from Mexican VAT, such as existential foodstuffs.

• 16% (Standard) – applies to all taxable supplies, with certain exceptions.
• 0% (Reduced) – existential foodstuffs such as milk, bread, wheat, meat, corn, and other agricultural services.

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VAT Payments And Returns In Mexico

All businesses with Mexican VAT number must submit periodic VAT reports and payments.

VAT Returns Frequency In Mexico

For all companies that operate in Mexico, VAT returns must be submitted monthly by the 17th of the month following the period end.

Penalties in case of late filings or misdeclarations

In the case of the late filing of VAT returns and payments, the Mexican government prescribed the penalties as follows:

• 20% of the VAT due if the taxpayer pays the amount before being notified by the tax authorities of a final resolution but after an audit has begun.
• 30% of the VAT due if the taxpayer pays the amount after being notified by the tax authorities of the final resolution.
• 55% to 75% percent of the VAT due in other cases.

Due to the electronic invoicing system, all electronic invoices (Comprobante Fiscal Digitales por Internet – CFDI) must contain at least the following:

• supplier/issuer data (name, address, tax number of the company)
• customer data – a name and address
• unique, sequential invoice number
• date of issuance
• location of issuance (city name)
• The serial number of the digital certificate
• authorization number (the one provided by the Local Tax Authorities)
• the authorization year
• full description of goods and services supplied – quantity, the price per unit
• the net, the taxable value of the invoice
• rate and amount of VAT applicable for the category of goods and services provided
• the invoice total, the gross value of the invoice

From 2014, Mexican Tax Authority (Servicio de Administración Tributaria, or SAT) introduced mandatory electronic invoicing for all companies generating more than 250,000 MXN per annum.

Electronic invoices (Comprobante Fiscal Digitales por Internet – CFDI) are digital versions of paper invoices that are encrypted. Every electronic invoice must have a digital signature (Sellos Digitales Certificados), which verifies the origin and authenticity of the invoice and must be stored on a central database hosted by the local tax authority or government-approved vendor.

Real-time reporting to Mexican Tax Authorities (Servicio de Administración Tributaria – SAT) is mandatory for all taxable persons in Mexico.

How does it work?

1. The seller generates the electronic invoice with the buyer’s data and automatically places his digital signature (Sellos Digitales Certificados – SDC)  and an electronic certificate to send it to the PAC.
2. PAC will validate the authenticity of the invoice, and if everything is correct, PAC will return the invoice with the seller’s CSD stamp
3. Simultaneously, PAC will send the stamped electronic invoice (CFDI) to the SAT (Mexican Tax Authority)
4. Together with an XML, the seller’s software will generate the PDF version of the invoice, and then the seller will have an XML and PDF file.
5. The seller will send PDF and XML files to the buyer.

Who is affected by this obligation?

All entities (Moral or Fisica) who have an income from their economic activity must issue an electronic invoice.