What is the SAT?
The Tax Administration Service (SAT) is Mexico's tax authority, created in 1997 as a decentralized body of the Secretariat of Finance and Public Credit (SHCP). Its central function is to apply tax and customs legislation, collect federal contributions and fight evasion.
The federal taxes it administers are mainly three: the Income Tax (ISR) that taxes the profits of individuals and legal entities; the Value Added Tax (VAT) that taxes the consumption of goods and services; and the Special Tax on Production and Services (IEPS) on specific products like fuels, alcohol, tobacco and sweetened beverages.
The SAT also administers the Federal Taxpayer Registry (RFC), Mexican customs and, since the early 2000s, the electronic invoicing system.
History of electronic invoicing in Mexico
Mexico was one of the first countries in the world to adopt mandatory electronic invoicing. The journey had four clear stages:
- 2004 — The CFD (Digital Tax Receipt) appears, initially optional. The issuer generated it with their own CSD without third-party intervention.
- 2011 — The CFDI (Digital Tax Receipt over the Internet) is born, introducing PACs as certifying intermediaries. It coexists with CFD.
- 2014 — Universal mandatory CFDI for all taxpayers with annual income above 250,000 pesos. CFD disappears.
- 2017-2018 — CFDI 3.3, first major reform with closed catalogs and new validations.
- 2022-2023 — CFDI 4.0, in effect since April 2023, with validation against the Tax Status Certificate.
What is a PAC and why does it exist?
An Authorized Certification Provider (PAC) is a private company authorized by the SAT to validate, certify and stamp CFDIs on its behalf. The figure exists because the SAT doesn't want to receive hundreds of millions of receipts per day directly: it delegates that operation to PACs that meet technical, security and financial requirements.
PACs are not invoicing systems: they are stamping services. They receive an XML signed by the issuer, validate it structurally against the SAT's Annex 20, validate the data against official catalogs (RFC, products, units) and, if everything checks out, assign a UUID Tax Folio and a digital tax stamp. Then they send a copy to the SAT.
Today there are dozens of authorized PACs in Mexico. Each one charges per stamp (the individual transaction) and the quality of their infrastructure varies: response time, uptime, additional validation rules and technical support.
CFDI lifecycle
A CFDI goes through five states from when it's generated until the end of its tax life:
- Generation — The issuer's system composes the XML per Annex 20 with recipient data, line items and taxes.
- Sealing — The XML is cryptographically signed with the issuer's Digital Seal Certificate (CSD).
- Stamping — A PAC validates the XML, certifies it, assigns a UUID Tax Folio and sends a copy to the SAT.
- Distribution — The issuer delivers the XML and the printable PDF representation to the recipient.
- Retention — Both issuer and recipient are required to keep the XML for five years. The authority can request it during an audit.
What information does a CFDI contain?
A CFDI 4.0 is a structured XML file with mandatory fields defined by the SAT. The main sections are:
- Issuer data: RFC, legal name, tax regime and place of issuance (postal code).
- Recipient data: RFC, legal name, postal code of the tax domicile, tax regime and CFDI use.
- Line items: SAT code, description, unit, quantity, unit value, discount, taxes per line.
- Taxes: total transfers (VAT, IEPS) and total withholdings (VAT, ISR).
- Totals: subtotal, discount, transferred taxes, withheld taxes and total.
- Tax stamp: UUID, stamping date, SAT seal and PAC seal.
How does the SAT audit you using CFDI?
The CFDI system gives the SAT near real-time visibility of all formal economic activity in Mexico. Every stamped receipt arrives at the SAT with all the data: who sold to whom, which product, when, for how much and how much VAT it accrued.
With that information, the SAT generates pre-filled tax returns (ISR, VAT), detects inconsistencies automatically (for example, a taxpayer receiving CFDIs for purchases but not declaring proportional sales) and triggers electronic audits. The era of traditional in-person audits has given way to algorithmic auditing.
How Factura Digital relates to the SAT
With Factura Digital you issue your CFDIs from the browser, with ultra-fast stamping that's valid with the SAT. Stamping is backed up: if a PAC doesn't respond, your CFDI still gets stamped.
The official SAT catalogs (products, units, CFDI uses, tax regimes, payment forms, hazardous materials) are built into the app, and you can add customers from their tax status certificate, verified live with the SAT.
