It's been a year of heightened regulatory scrutiny for Latin American business owners, as laws are now on the books that require entrepreneurs to establish an electronic invoicing system. Thus far, it's turning out to be a program that's paying off for governments, most notably in Mexico.
Through the first six months of 2014, for every peso that Mexico's tax administration service SAT put toward auditing, it recovered 61 pesos, or the equivalent of $4.65, BNamericas reported. From January to June, that totaled nearly 79 billion pesos, a profit increase of more than 34 percent when contrasted with the same period in 2013.
Alvaro Enrique Cordon, president of tax auditing for a public accounting learning institution, told CNN Expansion that e-invoicing programs play a role in the official inspections of organizations' accounts.
"Auditing actions are based on monitoring by electronic invoicing systems of taxpayers," said Cordon. "[SAT] verifies that taxpayers are fulfilling their obligations, that each taxpayer is issuing an electronic invoice and SAT knows who issued it and for whom."
Roughly 52 percent of audited revenue was collected from large taxpayers through the use of SAT, according to BNamericas. The remaining revenue was from payers that don't earn as much, therefore don't have the same taxable rate.
Most countries have a progressive tax rate law, meaning that the more an individual or business makes, the more they tend to pay to the government in taxes.
E-invoicing became required in January for most Mexicans
The required electronic invoicing system, which is now mandated in most of Latin America has been put into effect on a staggered basis. In other words, while it went into effect in some countries fairly early in 2014, it didn't kick in for every country at the same time. BNamericas noted that for taxpayers in Mexico making less than 500,000 pesos in 2012, they had until the end of March to move to the e-invoicing system. For everyone else, they had to start on Jan. 1.
Clearly, taxpayers are adhering to the e-invoicing rules. Through the first half of 2014, 2.4 billion electronic invoices have been sent to the Mexican government, up from 119 million in all of 2011, based SAT data.
While all companies over 250,000 Pesos are now required to use e-invoicing, that doesn't mean that every system is built the same way. There are a variety of programs that you can use, but some are more complete than others. You'll be hard-pressed to find an e-invoicing package that's more complete than Invoiceware's. Not only does it make invoice validation simple, but there are built in protections that can help you avoid paying more to the government than you need or deducting more than you should.