September 2015 is quickly approaching, and in Mexico that means the journal entries, known as Polizas, are due for organizations that are required to submit the eContabilidad reports. As the deadlines arrive, we wanted to use this opportunity to address the confusion concerning Amparo and those that have filed for an Amparo.
It is important that you work as a team – your local finance staff, corporate controllers, corporate IT teams, and your auditors – to understand your final decisions. This article outlines the basic questions and updates we are hearing from our clients across Mexico.
What is an Amparo?
There were a number of companies that filed a court case against the Mexico SAT stating that the obligation to send electronic accounting documents was unconstitutional among other reasons. There were a number of Amparos handed out prior to the legislation going live – around 16,000 out of the ~200,000 companies required to file in 2015 received this legal stay.
What is the current status of Amparo court cases?
For many, the trial for the Amparo is still going on and the courts have not determined anything yet. Companies that have the Amparo have a stay and don’t have to submit any of eContabilidad reports (catalog, trial balances, polizas) for the moment. However, there are two main points to be made:
- Many court cases in Mexico, such as those in Chihuahua, have been denied with a ruling in favor of the Mexico SAT
- Once the case is resolved and if the ruling is in favor of the Mexico SAT, a company is immediately responsible to generate ALL the reports.
Why are court cases denying Amparos and ruling for the Mexico SAT?
The main reason the courts are denying Amparos are as follows:
- If a company already submitted the chart of accounts or the trial balances they have already accepted the law and will need to generate the polizas
- If a company has already implemented electronic invoicing, this proves that the company has the technical competence to create and send the eContabilidad reports
If my Amparo decision is favorable and we win the court case, do I I still have to generate eContabilidad reports?
Yes, you will still have to generate eContabilidad reports according to our recent conversations with the Mexico SAT. The only different is that you will not be required to send these reports electronically. Instead, the SAT will physically come to your organization and ask for them for two reasons: (1) your company is being audited or (2) your company is claiming VAT tax credits (devolucion or compensacion, for example).
If you are a multinational corporation already sending and receiving CFDI electronic invoices, be prepared to implement a solution for eContabilidad. Ultimately, you will have to provide this data even if you are not required to file it electronically. And if your court case is denied, as many have already been, then you will be required to supply this data.
If you win the Amparo and you are audited or need toclaim VAT tax credits (devolucion or compensacion), you will be required to create this data as this is the SAT process going forward. Remember, there were similar court cases during the move to CFDI and ultimately 95% of the country adopted electronic invoicing.
Next steps: Talk to your auditors and set up a project team to understand the solution requirements, project timelines and ultimate costs. Waiting is not an option at this point in time. Contact us to learn more about recommended next steps.