New app from the Mexican Tax Administration Service designed to determine the monthly VAT returns automatically

The Mexican Tax Administration Service (SAT) continues to innovate and invest in technology and artificial intelligence to make it easier and more efficient for taxpayers to file their monthly tax returns.

On February 1st, 2024, The Mexican Tax Administration launched a new online platform for filing the monthly Value Added Tax (VAT) returns, which will be applicable for taxpayers registered in the general regime.

One of the advantages of the new platform is that it already includes preloaded information according to the amounts contained in the electronic invoices (CFDI) issued and received in the calendar month to which the VAT return corresponds. It is also based on the “payment in one installment (PUE)” method and contains the payment complements issued and received in the same month, beginning with the information related to the January 2024 monthly VAT return due in February 2024.

In the recent years, the Mexican tax authority has implemented the use of technology and artificial intelligence for compliance with tax obligations, ranging from the issuance of electronic invoices (CFDI) for all activities carried out by companies, to applications dealing with different returns applicable to taxpayers.

Following this, the app that used to file the monthly VAT return for the taxpayers registered in the general regime in the SAT database, now incorporates preloaded amounts taken from the electronic invoices issued and received by the taxpayer.

VAT is one of the indirect taxes applied to consumption in Mexico in accordance with the provisions of the VAT Law. In accordance with current legislation, VAT is payable by those who carry out the following commercial activities:

• Disposal of goods, i.e., sale and acquisition of products
• Independent services
• Leasing of goods
• Importation of goods or services

In addition, VAT is calculated on a cash flow basis.

Below are some of the new features of the platform:

• Pre-filling of data based on the income and expenses of the month being declared (this information is obtained from the CFDIs issued and received by the taxpayer).
• The information is obtained from the electronic invoices issued and received with the PUE method which means that the invoice was paid/collected in a single payment within the month in question. For the PPD method invoices, which means that the payment was made in installments or deferred, the VAT information is obtained from the electronic payment receipts (“complementos de pago”), where this complement must be issued when an invoice is collected or paid after the month in which it was issued.
• Among other things, the app contains information related to taxable and exempt transactions, cancellations, discounts, tax bases.
• The use of the e.Firma (electronic password) is required to submit the corresponding returns.

Currently the platform allows the taxpayer to edit the pre-filled data in case the pre-filled information is not correct, however, this could change in future versions.

With these changes to the VAT application, the tax authorities have reinforced their position regarding the real time evaluation of the tax situation of taxpayers. This creates a new challenge – to maintain exhaustive vigilance in the way CFDIs are issued to/received from each taxpayer.

Undoubtedly, these changes will lead taxpayers to adopt better practices in relation to their internal controls for the daily operations. On a positive note this new application should help taxpayers to comply with their tax obligations more easily.