Mexico Deferred Taxes Overview
The Mexico Deferred Taxes SuiteApp provides features and capabilities necessary to record deferred taxes for businesses operating in Mexico in accordance with Mexico tax laws.
In Mexico, there is a legal requirement for businesses to use the cash basis method of accounting. By contrast to the accrual method, under the cash basis method, tax liabilities are booked only when the payment is made or received.
This means that in order-to-cash processes (sales), only the receipt of payments from customers triggers the output tax liability. In procure-to-pay processes (purchases), the input tax can only be recognized when the payment is made to the vendor.
To support these scenarios, the Mexico Deferred Taxes SuiteApp enables you to configure deferred taxes for Mexico and specify target accounts for all deferred tax types. For more information, see Setting Up Mexico Deferred Taxes.
At period end, you can run the Mexico Deferred Taxes process to perform accounting adjustments. By running this process, you can generate custom transactions and journal entries to reflect all payments made, and move taxes from transitory to target accounts. For more information, see Running the Mexico Deferred Taxes Process.
Mexico Deferred Taxes SuiteApp is not compatible with the multi-book feature.
The Mexico Deferred Taxes process includes the following transactions:
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Cash sale
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Cash refund
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Invoice
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Credit memo
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Customer payment
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Vendor bill
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Vendor payment
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Bill credit
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Vendor prepayment
Do not include transactions with an amount of zero, as they cause blocking executions.
Also, the SuiteApp comes with the Mexico Deferred Taxes Analytics Workbook to help you validate the amount of deferred taxes due for a given accounting period. For more information, see Generating the Mexico Deferred Taxes Report.
When you install the Mexico Deferred Taxes SuiteApp, NetSuite automatically creates some predefined tax accounts based on the SAT Chart of Accounts. For more information see Default Deferred Tax Accounts for Mexico. For information about installing this SuiteApp, see Mexico Deferred Taxes Installation.
To see the list of terms used in NetSuite to support Mexico-specific business processes, see Mexico Terminology