The "use of CFDI" is one of the concepts that can most confuse taxpayers when issuing an electronic invoice in Mexico. However, understanding what it means and how to select the correct option is essential to comply with the regulations of the Tax Administration Service (SAT). In this article, we will explore what the "use of CFDI" is, why it is important, and how to choose the correct one according to each situation.

Contents:

• What is the "Use of CFDI"?

• What is the Purpose of the "Use of CFDI"?

• Types of Use of CFDI

• How to Select the Correct Use of CFDI?

• What Happens if I Select an Incorrect Use?

• Conclusion

What is the "Use of CFDI"?

The "Use of CFDI" is a mandatory field in the electronic invoice or CFDI (Digital Tax Receipt via Internet) that indicates the purpose or destination that the recipient will give to the invoice. In other words, this field defines how the recipient (whether an individual or a corporation) will use the expense being invoiced, such as tax deduction, acquisition of assets, general expenses, among others.

The use of CFDI is indicated by a specific code that the taxpayer must choose when generating the invoice. This code must be provided by the client, as they are the ones who determine the purpose of the transaction according to their economic activity and fiscal needs.

What is the Purpose of the "Use of CFDI"?

The use of CFDI has several important purposes within the Mexican tax system:

1. Tax Compliance: It allows the SAT to have better control over the nature of transactions and the reason why invoices are issued.

2. Deduction of Expenses: It facilitates taxpayers in deducting certain expenses for tax calculation purposes, as the use of CFDI defines the fiscal destination that that expense will have.

3. Facilitation of Accounting: It helps classify invoices according to the type of transaction, which is useful for accounting purposes and for the correct presentation of tax declarations.

Types of Use of CFDI

There are several types of "Use of CFDI" that taxpayers can select, depending on the purpose of the invoice. Some of the most common are:

• G01 - Acquisition of Goods: Used when the invoice is for the purchase of goods or products.

• G03 - General Expenses: Used for operational and administrative expenses of the business.

• I01 - Constructions: Used when acquiring goods or services related to constructions.

• P01 - To be Defined: This code is used when the specific use of the CFDI is not clear at the time of issuing the invoice. It is common for sales to the general public.

It is important to note that the SAT has a complete catalog of "Use of CFDI" options, and the issuer must select the one that best fits the transaction.

How to Select the Correct Use of CFDI?

Choosing the correct use of CFDI is the responsibility of both the issuer and the recipient of the invoice. Here are some tips for choosing the appropriate one:

1. Know the Client's Activity: Ask the client what the use of the CFDI will be to know whether it involves acquisition of goods, general expenses, investments, among others.

2. Consult the SAT Catalog: Use the "Use of CFDI" catalog published by the SAT to verify that you are selecting the correct option.

3. Clear Communication with the Client: Maintain direct communication with the client to define the use of CFDI before generating the invoice, as once it is issued, it cannot be modified without canceling and generating a new one.

What Happens if I Select an Incorrect Use?

Selecting an incorrect use of CFDI can have several implications:

• Problems for the Client: If the use of CFDI is incorrect, the client may not be able to deduct that expense in their tax declaration, which could result in financial problems or fines.

• Cancellation and Issuance of a New Invoice: To correct the use of CFDI, it is necessary to cancel the incorrect invoice and issue a new one with the correct data. This can be tedious and generate additional complications, especially when certain accounting periods have already closed.

• Fiscal Inconsistencies: Issuing invoices with incorrect uses of CFDI can lead to inconsistencies in accounting, which could attract the attention of the SAT and result in audits.

Conclusion

The use of CFDI is a fundamental aspect of issuing electronic invoices in Mexico. Understanding what it is, how it works, and how to select the correct use is crucial to ensure compliance with tax regulations and avoid problems for both the issuer and the recipient of the invoice.

At Cretia, we strive to make the process of electronic invoicing as simple as possible. Our platform includes all the necessary tools for you to issue your electronic invoices with the appropriate use of CFDI, complying with SAT regulations and ensuring that both you and your clients can enjoy a process free of errors.