Costa Rica is one of the latest countries in Latin America to embrace electronic invoicing, and many companies doing business in the country are under pressure to find a service provider to help them comply with the country’s eInvoicing mandate. Manufactures and retailers are set to fall under the mandate in the next few months.
Costa Rica has been rolling out its eInvoicing mandate to businesses by category since the beginning of 2018. Many businesses in the country are already subject to the mandate, and those that aren’t yet will have to comply by the end of October as the country moves to establishing deadlines by tax ID number.
The eInvoicing requirement began rolling out in January, with deadlines for compliance depending on a company’s industry. Most services-based companies doing business in Costa Rica had compliance deadlines of May 1, 2018, or before, but other businesses still have until the fall to comply.
Specifically, remaining companies with tax ID numbers ending in 1, 2, or 3 have a deadline of Sept. 1; companies with tax ID numbers ending in 4, 5 or 6 have a deadline of Oct. 1; and companies with tax ID numbers ending in 0, 7, 8 or 9 have a Nov. 1 deadline.
Electronic invoicing for manufacturers and retailers
The eInvoicing mandate requires companies with operations in Costa Rica to issue electronic invoices either by using a software provider or by using the software provided by the tax administration. Generally, companies that issue large numbers of invoices daily will need to use a software provider that can automate the process, as the tax administration software is only available for smaller businesses that issue fewer invoices and don’t need automation.
With the government set to issue large fines and penalties for invoices that are reported incomplete, companies doing business in Costa Rica have strong motivation to comply. The government can even shut a business down in extreme cases of non-compliance.
Preparing for the eInvoicing mandate
In order to prepare for the mandate, manufactures and retailers need to do what many service providers have already done: find a reliable software provider, such as Sovos, which has experience implementing eInvoicing in the most complex markets, such as Brazil, Mexico and the rest of Latin America.
The provider needs to be able to, at the very least, meet the minimum requirements of eInvoicing for the country. That means having the ability generate XML in the standard format required by the government, and also signing the invoice, sending it to the government for approval and archiving it for a period of at least five years.
Other requirements include an extensive list of regulations related to language and the content of the invoice itself. Beyond that, the right eInvoicing vendor will offer a solution that’s flexible and efficient.
Complexity of eInvoicing in Latin America
In addition, one of the most complex things to deal with regarding eInvoicing in any region, including Costa Rica, is constant change in regulations. Costa Rica is just beginning to implement the basic modules of an eInvoicing mandate and will expand by adding elements such as transportation and inbound eAccounting. The mandate, then, will become more complex.
In any case, two regulatory changes at a minimum per year is standard in most eInvoicing jurisdictions. Companies need to partner with a software provider that will be be there when the law changes and automate the process of implementing changes in regulatory policy.
Sovos is a pioneer in providing eInvoicing services to Latin America and Europe as governments continue to mandate eInvoicing as a way to maximize tax collections. Manufacturers and retailers that need an eInvoicing service provider can turn to Sovos for solutions that will enable them to meet mandates in Costa Rica as well as around the world.
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