CFDI Invoice

Overview

The CFDI (Comprobante Fiscal Digital por Internet) is Mexico's mandatory electronic invoicing system, enforced by the Tax Administration Service (SAT). It replaced paper invoices in 2004 and became compulsory for all businesses in 2014. The CFDI serves as a legally valid digital tax receipt documenting commercial transactions, payroll, payments, and other fiscal activities.

Importance of CFDI

• Legal Requirement: Businesses cannot operate legally in Mexico without issuing CFDIs.
• Tax Compliance: Ensures proper VAT collection and audit trails.
• Fraud Prevention: Digital signatures and validation reduce invoice fraud.
• Efficiency: Automates tax reporting and reduces administrative burdens.

Technical Requirements

Core Components

1. Digital Certificates:

   • e.firma: Digital identity certificate issued by SAT.
   • CSD (Certificado de Sello Digital): Digital seal used exclusively for signing CFDIs.

2. PAC (Proveedor Autorizado de Certificación):

   • SAT-certified third-party providers that validate invoices, assign UUIDs, and apply digital stamps.

3. XML Format: Invoices must follow SAT's Anexo 20 technical specifications.

CFDI Version 4.0 (Effective 2022)

• Stricter validation of receiver details (RFC, name, postal code).
• Mandatory inclusion of tax regime and export indicators.
• New attributes for concept-level tax status.
• Revised cancellation rules requiring specific reason codes.

Compliance Process

Issuing a CFDI

1. Registration: Register with SAT and obtain RFC (Mexican tax ID).
2. Certificates: Secure e.firma and CSD from SAT.
3. Invoice Generation: Create XML invoice following Anexo 20 standards.
4. PAC Validation: Submit to PAC for digital stamping and UUID assignment.
5. SAT Submission: PAC sends validated invoice to SAT.

Receiving a CFDI

• Validate authenticity via SAT's ConsultaCFDI service.
• Match payment complements (CFDI type "P") for credit transactions.

Complementary Documents

• Addendas: Optional custom extensions for buyer-specific data (e.g., PO numbers).
• Complementos: Mandatory SAT-defined extensions for specific industries/transactions:
  • Payroll (Nómina)
  • International trade (Comercio Exterior)
  • Installment payments (Pagos)
  • Transport (Carta Porte)

Cancellation Process

• Requires PAC intervention and SAT approval.
• Must specify reason code (e.g., error, operation void).
• Recipient approval needed for invoices over MXN 1,000 (72-hour window).
• Automatic cancellation if no response is received.

Penalties for Non-Compliance

• Fines ranging from MXN $400 to $112,650 per violation.
• Temporary suspension of CSD certificates.
• Potential business closure for repeated offenses.

Key Challenges

• Keeping pace with frequent schema updates (e.g., CFDI 4.0).
• Managing real-time validation at scale.
• Integrating PAC services with internal systems.
• Ensuring cross-border compliance for imports/exports.

Archiving Requirements

• Retain original XML files for 5 years.
• Ensure data integrity and availability for SAT audits.
• Maintain both issuer and recipient copies.

For detailed technical specifications, refer to SAT's official Anexo 20 guidelines.