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After repeated delays and efforts to maximize industry compliance, Mexico’s federal tax authority is set to begin enforcing CFDI 4.0, the new electronic invoice system for moving freight. Originally intended to take effect at the beginning of 2022, the new system has posed challenges for many manufacturers in the country. 

CFDI 4.0

Now, several extensions later, the new requirements for digital tax documentation are already rolling out – most notably the porta carte requirement. Most companies have already achieved compliance and are urged to continue using CFDI 4.0. However, many companies are still using CFDI 3.3. And the window of time is shrinking for them to upgrade their processes.

What Is CFDI 4.0?

Nearly two decades ago, Mexico became a pioneer in transitioning from paper to electronic invoicing for business-to-business commerce. In short, a CFDI is the digital version of freight invoices required prior to and during the transport of manufactured goods. 

CFDI or e-invoicing is intended to expedite the capture and validation of business transactions. This helps Mexico’s tax authority, SAT, more effectively collect required taxes from these transactions.  Since 2014, CFDI has been mandatory for all businesses. Since then, the system has undergone several updates and transformations, including the mandating of the XML file format standard for electronic invoicing and the use of digital signatures.

The newest version of the Internet Digital Tax Complement in Mexico is called CFDI 4.0 or electronic invoice 4.0 and was originally slated for January 1, 2022. This new format replaces the previous version (CFDI 3.3) and impacts the issuance and reception of electronic invoices and other related flows, such as CFDI withholdings or payment complements, payroll, etc.

What Changes?

Some of the primary changes with CFDI 4.0 include:

  • Requires a new global-invoices and summary-invoices element that directly affecting ticket portals and point of sales
  • Requires postal code and recipient’s tax regime
  • Requires name validation
  • Adds a new attribute for primary sector
  • Adds a new attribute for indicating whether the goods are intended for export
  • Adds a new attribute to indicate if the deliver is subject to tax
  • Adjusts the validation rules extensively
  • Substitutes a new element at the concepts level for the Complement for Third Party Accounts
  • Requires withholding CFDI to document the withholding of taxes and payments conducted by resident taxpayers abroad
  • Allows CFDIs to be cancelled using one of four reasons 

Carta Porte 2023

Possibly the most significant of inclusions in the overall CFDI system is the mandatory use of a bill of lading supplement or Carta Porte. SAT estimates that nearly 60% of all transported goods in Mexico are smuggled, resulting in upwards of $7 billion USD in lost tax revenues.

While existing paperwork for shipping cargo in the country does not go away, there will now be an addition to facilitate verification of ownership and origin for manufactured goods in transit in Mexico. The Carta Porte supplement provides identification for the shipment’s origin and destination, proves that the goods in question are indeed legally possessed by those shipping them or authorizing shipment, and specifies VAT amounts per shipment. It should enhance traceability to reduce stolen, counterfeited, or smuggled goods being transported in Mexico.

Originally slated to take effect January 1, 2022, the delayed Carta Porte has evolved somewhat. Responsibility and C2 configuration for sections under federal jurisdiction have been amended. And the supplement will soon be mandatory within the new CFDI 4.0  system.

Compliance Timeline

The Mexican government has been attempting to roll out the new electronic invoice system for nearly two years. In November 0f 2021, the SAT announced they were in the preparatory phase of rolling out CFDI 4.0. Implementation was to occur on January 1, 2022. 

However, due to the short notice, mandatory compliance was pushed out to May and later July, 2022. During this period, many companies transitioned to the new system, but many were unable to. Compliant companies were asked to remain on the new system, while non-compliant companies were granted a 6-month extension.

Since then, all eyes have been on the looming deadline of January 1, 2023. However, back in November, an additional, 3-month extension was granted, making April 1, 2023 the new deadline for mandatory compliance. Yet, even still, SAT has stated they will not begin applying sanctions for non-compliant documents until July 31, 2023. 

It would appear that no new extensions are coming. SAT has warned anyone engaged in the transport of freight within Mexico that fines up to $4500 USD may eventually be levied for non-compliance. And companies have only a few short months until these fines become reality. Now is the time to fully update electronic invoice systems and include the Carta Porte supplement.

It’s easier than you think.

Get in touch and we’ll show you how.