What is CFDI?
CFDI stands for Comprobante Fiscal Digital por Internet (Digital Tax Receipt via Internet). It's Mexico's mandatory electronic invoicing system that creates legally valid digital tax receipts verified by SAT (Servicio de Administración Tributaria), Mexico's tax authority.
Since April 2014, CFDI has been required for all business transactions in Mexico. The current version, CFDI 4.0, became mandatory on July 1, 2023, introducing stricter validation requirements and additional data fields.
Important: CFDI 4.0 requires an exact match of receiver name, RFC, tax regime, and postal code with SAT records. Even minor discrepancies will cause invoice rejection.
Why CFDI Matters for US Companies
Any US company with Mexican operations must comply with CFDI requirements. This includes:
- Companies with Mexican subsidiaries
- Manufacturing facilities (maquiladoras) in Mexico
- Businesses selling goods or services to Mexican customers
- Companies with employees on Mexican payroll
The Stakes Are High
- Penalties: MXN $19,700 - $112,650 per violation for not issuing CFDIs
- Business disruption: Potential closure for repeated violations
- Tax implications: Cannot claim expense deductions or VAT credits without valid CFDIs
- Retention requirements: Must store all CFDIs for at least 5 years
For US Companies: Your Mexican subsidiary needs its own RFC and CSD certificates—US tax IDs don't work in Mexico. However, CFDIs satisfy both SAT requirements AND provide documentation for US GAAP compliance.
Key Components of CFDI
Required Certificates
To issue CFDIs, your Mexican entity needs two certificates from SAT:
- e.Firma (FIEL): Advanced Electronic Signature used to authenticate with SAT systems
- CSD (Certificado de Sello Digital): Digital Seal Certificate used to sign invoices
PAC (Proveedor Autorizado de Certificación)
A PAC is a government-authorized third-party certification provider that:
- Validates your invoice data against SAT requirements
- Applies the digital stamp (timbrado) and assigns a unique UUID
- Transmits invoice data to SAT in real-time
- Returns the certified XML back to you
XML Structure
Every CFDI is fundamentally an XML file following SAT's Anexo 20 technical specifications:
- Contains all invoice data in structured XML format
- Includes digital signatures from both the issuer (your CSD) and the PAC
- Must be accompanied by a PDF representation for customer delivery
- Contains a QR code linking to SAT's validation page
CFDI Types
Mexico's tax system defines several types of CFDIs for different transaction types:
Ingreso (Income)
Sales invoices for goods and services. This is the most common type for standard business transactions.
Egreso (Credit Note)
Used for returns, discounts, rebates, and cancellations. References the original Ingreso CFDI.
Traslado (Transfer)
Documents goods movement between locations. Required for inventory transfers and logistics.
Nómina (Payroll)
Employee payment documentation. Required for all payroll transactions in Mexico.
Pago (Payment Complement)
Required when payment is received after invoice issuance. Used for credit terms and installment payments.
Required Fields in CFDI 4.0
Issuer (Emisor) Information
- RFC: Your Mexican tax ID, must be registered with SAT
- Legal name: Must match SAT records exactly
- Tax regime (Régimen Fiscal): Your fiscal classification
- Postal code: Of your registered fiscal address
Receiver (Receptor) Information
- RFC: Customer's tax ID (or generic RFC for general public)
- Legal name: Must match SAT records exactly
- Tax regime: Customer's fiscal classification
- Postal code: Customer's fiscal address
- CFDI Usage (Uso del CFDI): Purpose code indicating how customer will use the invoice
Tip: Use the generic RFC XAXX010101000 for sales to the general public (B2C). For foreign customers without a Mexican RFC, use XEXX010101000.
Invoice Details
- Place of issuance: Postal code where invoice is generated
- Date and time: When the invoice is created
- Payment method (Método de Pago): PUE (single payment) or PPD (deferred/installments)
- Payment form (Forma de Pago): Cash, bank transfer, card, etc.
- Currency: And exchange rate if not MXN
- Export indicator: Required for international transactions
Line Items (Conceptos)
- Product/service code (ClaveProdServ): From SAT's catalog of 52,000+ codes
- Unit code (ClaveUnidad): Standardized unit of measure
- Description: Clear description of goods/services
- Quantity and unit price
- Taxes: IVA (16%), ISR retention, etc.
- Tax object indicator (ObjetoImp): Whether item is subject to tax
Tip: Always verify your customer's Constancia de Situación Fiscal (tax status certificate) before invoicing to ensure their data matches SAT records.
The CFDI Process Flow
Here's what happens when you create a CFDI:
Common Challenges for US Companies
Language Barrier
All SAT systems, documentation, and error messages are in Spanish. This makes troubleshooting difficult for US-based finance teams.
RFC Validation
Receiver data must exactly match SAT records—including accents, capitalization, and legal suffixes. A single character mismatch will reject the invoice.
Product Code Selection
SAT's catalog contains over 52,000 product and service codes. Selecting the correct code requires understanding both the product and Mexican tax classification.
Tax Regimes
Mexico has 20+ fiscal regime options. Both issuer and receiver must use the correct regime code for their entity type.
Payment Complements
If you invoice with payment method PPD (deferred), you must issue a separate Payment Complement CFDI when payment is received. Missing these is a common compliance gap.
Carta Porte
An additional complement required for goods transport. Required for shipments on federal highways and international movements.
CFDI Cancellation Rules
Cancelling a CFDI in Mexico is not straightforward. Here are the key rules:
- CFDIs can only be cancelled within the same fiscal year
- A valid cancellation reason code must be provided
- Most cancellations require receiver acceptance
- The receiver has 72 hours to respond to cancellation requests
- If no response within 72 hours, the cancellation is auto-accepted
- A substitute CFDI may be required depending on the reason
- All cancellations are permanently logged with SAT
Important: Cancellation requests must be responded to within 72 hours or they're automatically accepted. Monitor your pending cancellation requests carefully.
Penalties for Non-Compliance
| Violation | Penalty |
|---|---|
| Not issuing CFDIs | MXN $19,700 - $112,650 per violation |
| Missing required complements | MXN $400 - $600 per CFDI |
| Improperly issued invoices | Denied expense deductions |
| Invalid CFDIs | Cannot claim VAT credits |
| Tax fraud | Potential criminal charges |
| Repeated violations | Business closure |
Glossary
Key terms you'll encounter when working with Mexican invoicing:
| Spanish Term | English Translation |
|---|---|
| SAT (Servicio de Administración Tributaria) | Tax Administration Service (Mexican IRS) |
| RFC (Registro Federal de Contribuyentes) | Federal Taxpayer Registry (Tax ID) |
| CFDI (Comprobante Fiscal Digital por Internet) | Digital Tax Receipt via Internet |
| PAC (Proveedor Autorizado de Certificación) | Authorized Certification Provider |
| CSD (Certificado de Sello Digital) | Digital Seal Certificate |
| e.Firma / FIEL (Firma Electrónica Avanzada) | Advanced Electronic Signature |
| UUID | Unique identifier (32 characters) assigned by PAC |
| Timbrado | Digital stamping/certification process |
| Anexo 20 | SAT's technical specification for CFDI |
| IVA (Impuesto al Valor Agregado) | Value Added Tax (16%) |
| ISR (Impuesto Sobre la Renta) | Income Tax |
| Régimen Fiscal | Tax Regime |
| Uso del CFDI | CFDI Usage (purpose code) |
| Forma de Pago | Payment Form (cash, transfer, etc.) |
| Método de Pago | Payment Method (PUE or PPD) |
| Clave de Producto o Servicio | Product or Service Code |
| Complemento de Pago | Payment Complement |
| Carta Porte | Bill of Lading (transport document) |