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●Risks and Countermeasures Faced by Japanese Companies For Japanese companies with a presence in Mexico, it is important to understand the CFDI system at the headquarters level rather than leaving it entirely to local management. This is especially true since the CFDI includes items that require judgment from the sales and accounting departments, making it risky to completely delegate to local accountants. Key Points for Risk Mitigation - Conduct regular reviews - Visualize the issuance process - Document supplementary information in internal manuals By implementing these measures, you can minimize the risk of penalties due to deficiencies or omissions in supplementary information. It should be noted that the CFDI system is still ongoing. (Introduced in 2022 → Mandatory in 2023 → Valid in 2025) CFDI 4.0 was introduced in 2022, and its issuance became mandatory in 2023. As of 2025, the SAT (Mexican Tax Authority) continues to maintain and strengthen this system, updating it as necessary. If you are considering expanding into Mexico or have concerns regarding labor, accounting, or taxation after entering the Mexican market, please feel free to contact us.

What is Mexico's electronic invoicing system "CFDI"? In Mexico, all corporations and sole proprietors are required to issue electronic invoices (CFDI: official name Comprobante Fiscal Digital por Internet). CFDI is necessary not only for the sale of goods and services but also for almost all transactions, including payroll and expense reimbursements. CFDI 4.0 (the fourth version), which was introduced on January 1, 2022, became fully mandatory in 2023 and continues to be applied as of 2025. At first glance, it may seem like just a rule for issuing invoices, but even minor mistakes such as omissions of supplementary information, incorrect entries, or exceeding cancellation deadlines can lead to fines of several hundred pesos per incident. In particular, Japanese companies that leave the system entirely to local subsidiaries without fully understanding it at headquarters often face increased risks. It is important to correctly grasp the system's mechanisms and establish an operational framework.

The Mexican Tax Administration (SAT) may impose the following penalties regarding CFDI: [1] Invoices without complementary information (Factura sin complementos) If a CFDI is issued without complementary information (complementos), a fine of 400 to 600 Mexican pesos may be imposed per instance. [2] CFDI with errors (CFDI con errores) Repeated occurrences of errors or inconsistent entries may also be subject to a penalty of 400 to 600 pesos per instance. [3] Late cancellation (Cancelación fuera del plazo) If the cancellation of a CFDI is made after the deadline, a fine equivalent to 5 to 10% of the invoice amount will be incurred (accumulated per instance). Note: CFDI can only be canceled within the "fiscal year in which it was issued." Additionally, it is mandatory to provide a reason for the cancellation and submit supporting documents.

In 2020, Mexico introduced the emissions trading system (ETS) for the first time in Latin America and began trial operations. As a result, the country's emissions trading system is referred to as the "Mexico ETS." After the preparation phase and the start of trial operations, Mexican stakeholders learned from countries like Germany, which have already implemented ETS, and contributed to the operation of the Mexico ETS by sharing and utilizing that knowledge domestically. According to sources, the Mexico ETS may be fully implemented in 2026. On the other hand, while the federal government of Mexico has not yet fully implemented the ETS, 11 out of the 32 states have already introduced a carbon tax at the state level: - Nuevo León - Tamaulipas - Durango - San Luis Potosí - Guanajuato - Querétaro - Zacatecas - Ciudad de México - Morelos - Yucatán

In the state of Aguascalientes, where our Mexican subsidiary is located, there are currently no ETS (Emission Trading System) or carbon tax in place. However, when implementing such measures, it is necessary to impose emission responsibilities on companies while also encouraging the reduction of carbon emissions without significantly impacting business operations. Therefore, extensive analysis is considered necessary to establish evidence-based pricing. In regions where such measures have already been implemented, tax incentives have been provided, so it cannot be said that there are universally negative impacts. However, from the perspective of companies, the differing responses to regulations across states make it difficult to gather information. According to local businesses, they plan to respond flexibly while closely monitoring the situation moving forward. On the other hand, according to the tax authorities' viewpoint, as reported by local newspapers, there are challenges associated with legally imposing emission responsibilities on companies.

Hello! I am Kazuno, the representative of Lightyear Mexico. In recent years, Mexico has become the ninth largest emitter of greenhouse gases (GHG) in the world, and interest and awareness regarding GHG reduction among the government and citizens have significantly increased. Efforts towards the full implementation of the Mexico ETS (Emissions Trading System) have already begun, and future developments are being closely watched. So, what is the Mexico ETS??? ETS stands for "Emissions Trading System." This is a system where the government allocates emission allowances to companies and facilities, mandating them to stay within those limits. - Companies that exceed their allowances must purchase the shortfall from other companies. - Conversely, companies that manage to reduce their emissions and have surplus allowances can sell those allowances in the market. This system aims to reduce overall GHG emissions by utilizing market mechanisms. In the future, Japanese companies operating in Mexico may also be required to: - Comply with emission allowances (manage emissions at factories and facilities) - Respond to emissions trading (procure shortfall allowances and utilize surplus allowances).