France is considering the ‘Mexican’ real-time reporting model. As it is not clear for every VAT practitioner what this model actually entails, we thought it would be interesting to take a deep dive into one of the pioneers of tax digitalisation: Mexico. The Mexican model, also referred to as the network clearance model, requires companies to send their invoices to certified third party service providers. These trusted third party service providers are responsible for controlling, approving and forwarding invoices. This model may sound appealing for governments and tax authorities, who would just have to monitor the trusted third parties instead of handling the high volume of invoices to control. However, there are inherent risks of delegating tax authority responsibilities to service providers. In order to understand those risks, this deep dive on the Mexican model will be divided into 2 parts focusing respectively on (1) what it is and how it works in practice, (2) the benefits and risks of such a model.
Source: summitto.com
