When Mexico announced its eContabilidad (eAccounting) legislation in 2014, several multinational companies filed a lawsuit, stating that the requirements were unconstitutional, technically unsound, and unfeasible. Many were granted amparos – legal stays delaying the electronic filing requirement – and the case recently made its way to the Supreme Court. In its July 2016 verdict, the court continued the amparos for technical reasons, but it ultimately found the fiscal email, eContabilidad and Mexico’s impending electronic audits constitutional. That means required compliance with this legislation is just a matter of time for the companies that are currently exempt.
Because the XML schema required under eContabilidad was written in English and was created by a third-party, the Supreme Court upheld the amparo in question. However, we have every reason to believe that these exemptions will be nullified as soon as the tax authority modifies the schema, meaning that companies leveraging amparo should be prepared to comply with eContabilidad soon.
Despite granting this particular provision, the Supreme Court upheld the right of Mexico’s tax authority (the SAT) to mandate the fiscal email, eContabilidad and employ electronic audits. The court made a point to say that not only do companies have the technical capabilities to comply with the laws, but that these mandates actually facilitate the fiscal compliance of taxpayers by expediting collection and verification processes, ultimately preventing unnecessary audits.
In the wake of this ruling, Mexico’s tax authority revealed more details about its electronic audits, which are scheduled to begin this month. If the SAT detects inconsistencies between declared income and taxes and the electronic documents received, it will trigger an automated notice to the taxpayer. Taxpayers then have 15 days to respond or dispute the charge. Those found in violation will face a fine of 20% of taxes owed. More details on the process can be found here.
In sum, amparos are not a permanent defense from the fiscal email, eContabilidad and electronic audits. Even companies that currently hold these stays must have the documentation required available to validate VAT deductions and in the event of an audit, and submitting these documents electronically is imminent. When your amparo runs out, will you be prepared?