What is a Factura? – Official Tax Deduct able Document in Mexico
A Factura is the legal receipt given for goods and services in Mexico that can be used for business expenses or for deductions in Mexico businesses. The receipts you receive from most vendors are not facturas but “Nota De Remission” (a simple receipt). You must generally ask for and or go to a special office, window (caja) or cashier to receive the official receipt known as a Factura. You will have to provide your company’s address, legal corporation name and tax identification number which is called a R.F.C. or Registro Federal de Contribuyente.
A Factura must include a copy of the sellers “cedula” or tax seal with their R.F.C number, their company address and phone number. When filled out correctly it must also have the items purchased, prices in pesos and the sales tax (I.V.A.) separately included with the grand total amount also written out in letters on the factura.
To obtain a RFC number you must apply wherever you will be doing business at the local Secretaria de Hacienda y Crédito Publico (SCHP). “Hacienda” as it is more commonly referred to here in Mexico is the equivalent to the U.S. Internal Revenue Service. Whether you are doing business as a corporation or a sole proprietorship (use of personal RFC) you must have an R.F.C. number as well as you must obtain a personal one for filing your personal income tax here in Mexico if you must do so.
The sales tax (IVA) has been 11% on all goods and services in Baja California and Baja California Sur but was 16% for all the rest of Mexico at this time. Effective January 1, 2014 IVA in both Baja states will rise to 16% to be on par. Baja has lost one of the last remaining remnants of the days when it was just a territory of Mexico. Business owners must convert to electronic filing or reprint their facturas as of January 1 to be in compliance.
The Mexican government and banks are very picky about their forms being complete and with NO corrections. Facturas are printed in series and all Facturas must be accounted for even if they have been voided, cancelled or lost. You must be sure to save or recover all copies of a factura before it will be accepted by Hacienda as cancelled.
What is so important about the factura is that these are the only receipts accepted for your business expenses. In other words if you don’t have a factura for it then it does not go on the books. For example when you buy gas and want to deduct it as a business expense you had better obtain a Factura and not just a sales receipt or nota de venta as it is called.
In your business you are required to create a factura for every sale you have and or you may make a general one for cash receipts for the day for example. If you do not create a factura then the money will not be properly accounted for and Hacienda will be interested in why you are not making any income.
While most tourist, retirees and even a lot of the Mexicans are not interested in obtaining a factura as they have no need or desire to deduct these expenses, you must still write or print out a factura if it is going to be accounted for. One trick you will see a lot in Mexico is the “we won’t charge you sales tax if you don’t want a factura”. This “discount” is not exactly something Hacienda will look kindly upon if it finds out about it. This is the way people do business under the table in cash but of course the law states that the 11% is to be charged on all goods and services.
You must be careful when getting a quote on goods or services because many times the IVA has not been included in your total and when you ask for a factura the business will then say you must pay an additional 11% to obtain a factura. This of course was never to be an option according to Hacienda. The way to avoid any hassles is be sure to tell the business that you do want a factura for your business expense and the bid will included all taxes and no surprises.
Also as stated above the sale tax (I.V.A.) must be collected and included on every factura and you must then pay that 11% to the government every month. So don’t forget that on every sale or service you bill for, you will be liable to pay Hacienda for the I.V.A you have collected. Also, if you are importing goods then you must pay 11% IVA (Baja) on the wholesale value at the time of importation. Then when you sell the item you owe the remaining difference between the 11% of wholesale that you already paid and the 11% of retail that you have now received. All this means, is that you are pre-paying part of the sales tax at the time of importation.
Now for larger corporations with a lot of imported goods in inventory this could be a substantial amount that you have pre-paid while waiting for it to sell. There are ways to account for this and receive credits on the inventory you are sitting on.
I will not go into all of this at this time as this is just a simple primer on the subject of “facturación” and it is important that you speak with your own accountant on how your Mexican tax liabilities are to be dealt with.