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No CFDI, no deduction: every invoice is stamped by the tax authority in real time

Last verified: 2026-10-27 · Status: Stable

Abroad, a supplier's own invoice or a receipt usually supports a tax deduction; in Mexico only a digital tax receipt (CFDI) validated through the SAT system before it is issued counts. An expense needs a CFDI to be deductible and VAT must appear separately on it to be credited, and payments above MXN 2,000 must go through the banking system or a card. SAT can temporarily block a company's ability to invoice, and invoices from suppliers on its fake operations list lose all tax effect for the buyer.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican law uses the Banxico FIX rate published in the DOF for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

Electronic invoice validated by the tax authority before issue (CFDI)	Mandatory textCFF arts. 29 and 29-A, as of 2026-10-27 · in force
Payments above this amount must be electronic, by nominative check or card to be deductible	2000 MXNLISR art. 27, section III, as of 2026-10-27 · in force
Minimum fine for not issuing a CFDI, 2026	22300 MXNCFF arts. 83 VII and 84 IV, as of 2026-10-27 · in force
Maximum fine for not issuing a CFDI, 2026	127530 MXNCFF arts. 83 VII and 84 IV, as of 2026-10-27 · in force
Days for a supplier presumed to issue fake invoices to respond	15 daysCFF art. 69-B, as of 2026-10-27 · in force
Retention period for accounting and tax records	5 yearsCFF art. 30, as of 2026-10-27 · in force
Corporate income tax rate	30 %LISR art. 9, as of 2026-10-27 · in force

The rule

1. Whenever the tax laws require a receipt for activities, income or withholdings, it must be issued as a digital document through SAT's internet system. Buyers of goods, users of goods, recipients of services and payers of partial or deferred payments must request the CFDI. To issue CFDIs a taxpayer needs a valid advanced electronic signature (e.firma), active tax obligations in the RFC registry and a digital seal certificate, and must send each CFDI to SAT (through an authorized provider) before issuing it, so that SAT validates the requirements, assigns a folio and adds its own seal. Exporters of goods not involving a sale must also issue a CFDI.
Cost to do it: SAT's own invoicing service is free; most companies pay an authorized certification provider (PAC) or an ERP connector at market rates.
Example: A Mexican subsidiary cannot invoice its first customer until it has its RFC, e.firma and seal certificate; an exported prototype shipped free of charge to the parent still needs a CFDI. / No US dollar effect.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (consolidated text, last reform DOF 9 April 2026), Arts. 29 and 29-A, 1981-12-31 official text · verified 2026-10-27 · changed: The DOF 12 November 2021 reform required active RFC obligations and e.firma to issue CFDIs and extended the CFDI to exports not involving a sale.

2. To be deductible, an expense must be supported by a CFDI, and payments over MXN 2,000 must be made by electronic transfer from an account in the taxpayer's name, nominative check from its account, credit, debit or service card, or SAT authorized electronic purse. Fuel must always be paid that way, whatever the amount. For VAT to be credited, the expense must be deductible for income tax and the VAT must have been charged expressly and shown separately on the CFDI.
Cost to do it: An undocumented or cash paid expense costs 30 percent of its amount in lost deduction, plus the 16 percent VAT that cannot be credited.
Example: A company pays a consultant MXN 50,000 plus MXN 8,000 VAT in cash. It loses MXN 15,000 of income tax deduction effect and MXN 8,000 of VAT credit, MXN 23,000 in total. / About USD 1,232 of extra tax on an expense of about USD 2,679.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (consolidated text, last reform DOF 1 April 2024); Ley del Impuesto al Valor Agregado (LIVA), DOF 29 December 1978 (consolidated text, last reform DOF 12 November 2021), LISR art. 27, section III; LIVA art. 5, sections I and II, 2013-12-11 official text · verified 2026-10-27 · changed: The DOF 12 November 2021 reform added the fuel permit details on the CFDI.

3. Failing to issue, deliver or make available a CFDI when required, or issuing one that does not meet the requirements, is an infraction fined at MXN 22,300 to MXN 127,530 (2026 amounts); on a repeat offense the authorities may also close the establishment for three to fifteen days. Issuing a CFDI to an RFC other than the buyer's, or conditioning it on the buyer showing a tax status certificate, is a separate infraction.
Cost to do it: MXN 22,300 to MXN 127,530 per infraction (2026).
Example: A shop that does not issue a CFDI to a business customer who asks for one can be fined at least MXN 22,300. / About USD 1,195 to USD 6,833.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (consolidated text, last reform DOF 9 April 2026); RMF 2026 updated amounts, DOF 28 December 2025, as printed in the consolidated CFF, Arts. 83, sections VII and IX, and 84, section IV, 2025-12-28 official text · verified 2026-10-27 · changed: The fine amounts were updated by the RMF published in the DOF on 28 December 2025; the DOF 7 November 2025 reform restated section IX.

4. Before cancelling a seal certificate, SAT may temporarily restrict its use, which stops the company from invoicing. Grounds include failing to file the annual return one month after the due date or two or more provisional returns, a taxpayer that cannot be located at its tax address, declared income or VAT that does not match the CFDIs and bank data SAT holds, mailbox contact details that are not correct, and a controlling shareholder whose own certificate was cancelled.
Cost to do it: No fee; the cost is lost sales while invoicing is blocked.
Example: A subsidiary that misses two monthly VAT returns finds its seal certificate restricted and cannot invoice customers until it corrects the omission. / No direct US dollar effect.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (consolidated text, last reform DOF 9 April 2026), Art. 17-H Bis, 2021-11-12 official text · verified 2026-10-27 · changed: The DOF 12 November 2021 and 7 November 2025 reforms widened the grounds, including the income mismatch ground in section VII.

5. When SAT detects a taxpayer issuing receipts without the assets, staff, infrastructure or material capacity to deliver the goods or services, or a taxpayer that cannot be located, it presumes the operations do not exist. The issuer is notified through its tax mailbox and SAT's website and has 15 days to respond. Once listed, the operations in its CFDIs have no tax effect for anyone, and customers that used them must prove the purchases were real or correct their tax position.
Cost to do it: Lost deduction at 30 percent and lost VAT credit at 16 percent on every affected invoice, plus surcharges.
Example: A company deducted MXN 2,000,000 of services from a supplier later listed under art. 69-B. Unless it proves the services were real, it must reverse the deduction (MXN 600,000 of tax) and the MXN 320,000 VAT credit. / About USD 49,293 of tax at stake.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (consolidated text, last reform DOF 9 April 2026), Art. 69-B, 2021-11-12 official text · verified 2026-10-27

6. Accounting records and supporting documents, including CFDIs, must be kept for five years from the date the related returns were filed or were due.
Cost to do it: Storage costs only.
Example: CFDIs supporting the 2026 annual return filed on 31 March 2027 must be kept until at least 31 March 2032. / No US dollar effect.Código Fiscal de la Federación (CFF), DOF 31 December 1981 (consolidated text, last reform DOF 9 April 2026), Art. 30, 1981-12-31 official text · verified 2026-10-27

Documentation and payment	Income tax deduction	VAT credit (MXN 16,000)	Extra tax cost (MXN)
CFDI and bank transfer	Yes	Yes	0
CFDI but paid in cash	No	No, because VAT is creditable only on expenses deductible for income tax (LIVA art. 5, section I)	46,000
Supplier's own invoice or receipt, no CFDI	No	No	46,000
CFDI from a supplier listed under CFF art. 69-B	No, unless operations are proven real	No	46,000

What happens to a MXN 100,000 plus VAT expense (USD 5,358) depending on how it is documented and paid. Sources: LISR arts. 9 and 27 III; LIVA art. 5 II.

Worked example

A foreign parent charges its Mexican subsidiary a management fee and the subsidiary also buys local services.
The local services are deductible only against CFDIs issued to the subsidiary's RFC and paid by bank transfer if over MXN 2,000.
A MXN 100,000 local service bought without a CFDI costs MXN 30,000 of lost deduction and MXN 16,000 of lost VAT credit, MXN 46,000 in total (USD 2,465).
The management fee from the foreign parent is not a CFDI; foreign suppliers are handled under separate deduction rules for payments abroad, covered on the taxes pages.

Step by step

1. Obtain RFC, e.firma and a seal certificate for the Mexican entity before the first sale.
2. Contract a PAC or use SAT's free service and connect it to the ERP.
3. Adopt a payables rule: pay only against a valid CFDI issued to your RFC, by transfer above MXN 2,000.
4. Check new suppliers against SAT's art. 69-B list and repeat periodically.
5. File every provisional and annual return on time to avoid seal certificate restrictions.
6. Keep CFDIs and accounting for five years from each related return.

Common traps

A printed invoice is only a representation; the XML stamped by SAT is the legal document.
Cash payments over MXN 2,000 lose the deduction even with a valid CFDI.
A supplier listed under art. 69-B years later can wipe out deductions you already took.
Two missed provisional returns can freeze invoicing through a seal certificate restriction.

Sources

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