Mexico Terminology
The following table defines the terms used in NetSuite to support Mexico-specific business processes:
|
Accrual basis |
Method of accounting that recognizes revenues and expenses when they are earned or incurred, respectively (regardless of when the money is received or paid). |
|
Bill of lading (carta porte) |
Document for transporting goods in Mexican territory, added as an annex to the CFDI. |
|
Cash basis |
Method of accounting in which revenue and expenses are booked only when cash is received or paid, respectively. In Mexico, tax liabilities are determined on a cash basis. |
|
CFDI |
Comprobante Fiscal Digital por Internet. The digital tax receipt provided by the internet that companies doing business in Mexico must use for electronic invoicing. Its format is defined by the SAT and allows immediate verification and certification of the invoice. |
|
Deferred taxes |
In Mexico, amount of taxes that are payable in future periods. They are recognized when payments are made to the vendor (on purchases) or received from customers (on sales). |
|
Deferred VAT (Value Added Tax) |
Type of deferred tax used in Mexico (IVA diferido). |
|
DIOT |
Declaración Informativa de Operaciones con Terceros. The text file that taxpayers in Mexico must submit to the SAT to report their monthly transactions with vendors. It contains details of the applicable value added tax. |
|
IEPS |
Impuesto Especial sobre Producción y Servicios. Tax applicable to alcoholic beverages, gasoline, diesel, tobacco, gambling and other specific products or services (Special Excise Tax). |
|
ISR |
Impuesto Sobre la Renta. Tax applicable to generated income (Income Tax). |
|
IVA |
Impuesto al Valor Agregado. Tax added to a product’s sales price. It is the value added at each stage of its production and distribution (Value Added Tax). |
|
Mexico Electronic Accounting Files |
The XML files containing accounting information that companies in Mexico must submit to the tax authority. These files must contain the chart of accounts, trial balance, and journal entries for all their transactions. |
|
PAC |
Proveedor Autorizado de Certificación. A provider that has been authorized by the SAT to certify electronic invoices and assign them the tax number (UUID). PACs are responsible for all communications between the taxpayer and the SAT. The use of a PAC is mandatory in Mexico for issuing electronic invoices to the SAT. |
|
RFC |
Registro Federal de Contribuyentes. The tax identification number assigned to individuals and legal entities in Mexico. |
|
SAT |
Servicio de Administración Tributaria. Tax Administration Service. It is essentially the Mexican tax authority. |
|
SAT Catalogs |
Charts published by the SAT containing official codes and values that classify a product, service, transaction, tax category or other business elements. The SAT requires taxpayers to use these codes and values in electronic invoicing and accounting documents. |
|
Target account |
The account into which deferred taxes are posted when the payment is made or received. |
|
Tax liability |
Total amount of tax debt owed by a taxpayer. |
|
Transitory account |
The account where deferred taxes are kept until the payment is made or received. |
|
UUID |
The Universally Unique Identifier (tax folio) assigned to the CFDI upon SAT’s approval. It consists of 32 digits displayed in 5 groups separated by hyphens. |