DIGITALIZING TAX

Mexico 2018 | TELECOMS & IT | B2B

Be it digitizing taxation, new fintech laws, or embracing blockchain technology, Mexico is outpacing other countries by a fair distance.

Federico Casas-Alatriste
FEDERICO CASAS-ALATRISTE
Managing Director
T-Systems Mexico
Luis Fernando Cadena
LUIS FERNANDO CADENA
CIO
Tax Administration Service (SAT)

How does the transition to the cloud help Mexico, and in particular SAT, improve efficiency?

FEDERICO CASAS-ALATRISTE SAT, the tax authority in Mexico, is moving to a multi-cloud environment, and T-Systems won the public bid to help it with its process. It is a complex one because it involves not only bringing a public cloud provider into SAT, but also setting up a private cloud for it. In addition, we need to put in place a component to orchestrate these different clouds. Also important is the concept of a “cloudifier." This is a service to facilitate the transformation of legacy applications developed in old-style environments into something that can be transported to the cloud. Many companies throughout the world are in the middle of this process of trying to transform themselves into agile entities that can operate in these new environments. SAT is not an exception. Through this process SAT will lower costs of operation and a give a better level of service to taxpayers.

What was the rationale for opting for a hybrid model for SAT's cloud, and what results will this new platform yield in the short-run?

LUIS FERNANDO CADENA There were two reasons: to offer a medium-term solution for SAT to have storage and processing capacities integrated under a private cloud; and to ensure an optimal use of public funds. One of the major benefits of a public cloud is the optimization of services. Another option was to set up new data centers to be able to run a project like this; however, the required investment was 10 times higher.

How advanced are companies in Mexico in terms of their digitalization process?

FCA There are two kinds of Mexican companies: one is the international and competitive ones that have grown significantly over the last several years. The second kind is, unfortunately, lagging in terms of technology. Top Mexican multinational clients, such as Grupo Alfa, Mexichem, and Arca Continental, are at the leading edge in terms of technology, and they are highly competitive. In order to win in the global markets, they have to be as good as the best. Unfortunately, this is not the case for all Mexican companies.

SAT is a pioneer in Latin America in terms of digitization regarding tax services. What is your strategy here?

LFC SAT leads the way in the use of technology for taxation and foreign trade. Apart from mega projects such as tax return and electronic invoices, we have implemented technological projects in the control of operation field. Foreign trade automation has pushed Mexico ahead of the rest of Latin America in conducting international business. Visitors from Latin American and European countries fly in to experience and learn from our systems. We are fully aware of Mexico's leadership in the tax sphere; SAT has received recognition from the Organization for Economic Cooperation and Development (OECD) and the World Customs Organization. A number of countries have incorporated the electronic invoice, digital tax return, and the return of the gathered information. A process that used to take 15 days can now be completed within 4 minutes.

Is there any industry that you serve more than others or a sector where you see great potential for your services?

FCA We originally had a strong focus on manufacturing, especially the automotive segment, which is important in this country. We have broadened this approach to other industrial segments, including consumer products. In general, the industry sector of the market was originally our main focus. On top of that, we decided in 2013 to penetrate the public sector. Today, we are providing important services to SAT. As we speak, we are approaching three additional segments: the health service industry, in which we already have some clients; the financial sector; and retail.

How do you plan to collect taxes from revenues earned from cryptocurrencies?

LFC SAT has the required infrastructure and technology to be able to work on a cryptocurrency scheme tax liability. However, the monetary regulation must be issued by the Bank of Mexico. At present, we are focusing on the benefits of blockchain technology used by cryptocurrencies. Although the current use of blockchain technology is primarily related to cryptocurrencies, it offers unmatched potential across all fields. For example, it allows for the taxation of basically any transaction. SAT is working on proofs of concept concerning the use of blockchain technology in tax and foreign trade procedures, because this provides transparency and process efficiency.