Argentina was an early adopter of electronic invoicing, with its e-invoicing journey beginning in 2002. The technology was only implemented on a widespread level across the nation in 2015, but it still beat most countries to digitizing its invoicing system.
While Argentina’s e-invoicing scheme may be less confusing than others, it’s important to know the exact rules and regulations to avoid paying the price that comes with non-compliance. This dedicated overview has you covered on all thing Argentina e-invoicing, no matter how things change in the future. Be sure to bookmark this page and check back periodically.
Here is a quick run-through of how Argentina’s e-invoicing process works:
Issue the e-invoice once you have the necessary recipient information
Receive the Electronic Authorization Code (CAE) from the AFIP Federal Public Revenue Administration (AFIP)
Once the e-invoice is validated, the issuer sends the document to the recipient
Both the issuer and recipient electronically store the invoice securely for 10 years
Characteristics of electronic invoicing in Argentina
Argentina B2B e-invoicing
Argentina was an early adopter of e-invoicing when considering the global landscape. It had an optional system starting in 2003, and it made electronic invoicing mandatory years later – slowly warming organisations up to the idea of transmitting data online.
Mandatory since 2015 for businesses operating in Argentina, the e-invoicing scheme also includes export invoices, cash receipts, credit memos and debit notes. Businesses registered in the country are required to file for an Electronic Authorization Code (CAE) through the domestic tax authority, and they must conform to the rules laid out in the mandate.
All taxpayers in the country – even freelancers – have had to meet particular e-invoicing obligations. These requirements change depending on the specifics of each business; for example, small businesses with an annual turnover under a particular threshold only need to issue e-receipts for in-person transactions, whereas larger businesses must issue e-invoices for all transactions.
Argentina B2G e-invoicing
As you may expect, having already started learning about Argentina e-invoicing, the country requires electronic invoices to be transmitted for B2G transactions.
The same rules apply as per B2B, where taxpayers are required to be approved by the tax authority, and they must issue compliant electronic invoices through the typical process.
Put simply, if you’re an Argentinian taxpayer doing business with public administrations and governmental departments, you must issue e-invoices.
Types of invoices and electronic documents
There are a host of invoices and electronic documents that businesses operating in Argentina should be aware of. Different business operations require specific types of receipts, including:
Invoices, invoice receipts and export invoices
Debit and credit notes
Purchase receipts of used goods
There are different types of invoices to be aware of, too:
Type A: Issued by registered taxpayers when transacting with other registered taxpayers
Type B: Issued by registered taxpayers when transacting with final consumers or exempt taxpayers
Type C: Issued by non-registered and exempt taxpayers to all customers
Type E: Issued by any taxpayer when dealing with exported operations
Type T: Issued by hotels and accommodation services for foreign tourists
Factura de Crédito Electronica: Applies to micro, small and medium-sized businesses, allowing the advance collection of credits and receivables issued to their customers. This type of invoice can be Type A, B or C, as defined above with their corresponding credit and debit notes.
Benefits of using e-invoicing in Argentina
While taxpayers are technically required to send and receive invoices electronically in Argentina, there are additional benefits to e-invoicing when compared to traditional invoicing.
Save costs: E-invoices reduce your reliance on paper usage, postage and manual labour
Time savings: With standardised formats and automated processes, it frees up your team to focus on what truly matters
Peace of mind: Authentication and validation are built into the e-invoicing process, ensuring the authenticity of the documents
Timeline of e-invoicing in Argentina
Argentina’s implementation of electronic invoicing was done over many years, following this journey:
2002: General Resolution 1361 is published, introducing e-invoices as a duplicate voucher
2005: Argentina published General Resolution 1956, introducing an e-invoice issuance and storage system
2006: General Resolution 2177 mandates the use of electronic invoices for certain groups of taxpayers
2008: General Resolution 2485 is published, establishing a special regime for the issuance and electronic storage of original receipts for registrants and small contributors
April 2015: General Resolution 3749 comes into effect, implementing widespread e-invoicing by mandating the technology for all VAT-registered taxpayers
April 2019: General resolution 4290/2018 mandates e-invoicing for all companies, including freelancers
June 2021: All e-invoices must include QR codes
Penalties: What happens if I don’t comply with e-invoicing in Argentina?
A taxpayer could receive significant penalties if they fail to meet the requirements of Argentina’s e-invoicing scheme.
As per conditions established by the Federal Administration of Public Revenues, those who fail to issue e-invoices or comply with the regulation may be sanctioned with the closure of their organisation for two to six days.
What else do I need for VAT compliance in Argentina?
While it’s important to stay current with e-invoicing rules and regulations in Argentina, your business also has other obligations.
Argentina’s VAT regulations, for example, require your organisation to pay attention to – and comply with – more than just electronic invoicing mandates. Overall tax compliance is vital for businesses, and Sovos is here to help.
Once an electronic invoice has been approved and issued, cancellations are not accounted for. Reversing the transaction must be done by issuing a credit note.
With electronic invoicing becoming more common globally, following the lead of Latin American countries like Argentina, it is important that you prioritise compliance.
The global – yet fragmented – adoption of e-invoicing solidifies the need to choose a single vendor for complete compliance wherever you do business. Sovos is a tax compliance partner you can trust, allowing you to focus on what truly matters.
Speak with a member of our team today to gain peace of mind.
Complete the form below to speak with one of our e-invoicing experts
Peru is far along in its e-invoicing journey, having implemented a mandate for all taxpayers to issue and receive electronic invoices. Regulated by the country’s Electronic Issuance System, e-invoicing was introduced in 2010 – though it was initially voluntary.
The e-invoicing scheme in Peru includes more electronic documents than just e-invoices, adding to the complexity—especially for international organisations that have multiple national e-invoicing regulations to comply with. This page is your dedicated overview of Peru’s e-invoicing; it will be updated when necessary, so be sure to keep it in your bookmarks.
Peru’s current electronic invoicing system does not require that the Electronic Payment Receipts (CPEs) be pre-validated by the National Superintendency of Customs and Tax Administration (SUNAT) or the OSE before being sent to their recipients. Once the voucher is generated, it can be sent concomitantly to SUNAT or even after being sent to the customer or recipient.
However, SUNAT discourages this because if the document previously sent to the client is rejected by the OSE or SUNAT, the document will lack tax validity and the taxpayer must issue a new document to his client.
This means that, even though CPE issuers can validate CPE through an asynchronous process, most issuers prefer to perform the pre-validation procedure or validate synchronously. Once the CPE has been received by the OSE or SUNAT, a Proof of Receipt (CDR) is issued, indicating to the issuer that the document sent for validation meets the requirements established by SUNAT.
Contingency
Currently, if the taxpayer is unable to issue the receipts outside the electronic issuance system due to force majeure or circumstances beyond their control, they must issue a return on a certain date with the payment receipts, credit notes and debit notes issued without using the Electronic Issuance System (SEE).
Acknowledgement of Receipt
In principle, recipients of electronic invoices must generate an acknowledgement of receipt for the invoices they receive. However, that approval may be tacit: current legislation has established that if the recipient does not acknowledge receipt, the invoice will be considered formally accepted eight days after receiving the document.
Characteristics of electronic invoicing in Peru
Peru B2B e-invoicing
Peru regulates its electronic invoicing scheme, in which the documents are known as Electronic Payment Receipts (CPE), through its Electronic Issuance System (SEE). It’s governed by its national tax authority, the National Superintendency of Customs and Tax Administration (SUNAT).
Companies must use this system and meet strict technical requirements for both issuing and receiving e-invoices. Its implementation began in January 2014, and small and medium enterprises were the last to be included in the obligation in early 2022. From then on, all taxpayers in Peru have been mandated to issue e-invoices, as well as other sales documents.
Peru B2G e-invoicing
Peru requires businesses to issue electronic invoices when transacting with suppliers of public entities and receive e-invoices from all public entities.
Much like with B2B transactions, the country’s scheme requires businesses to meet the standards set by the SEE system and archive electronic documents for five years.
Types of electronic payment receipts in Peru
Electronic invoice: Required in B2B and B2G transactions that generate tax credit. The validity of this document is conditional on strict compliance with structure, issuance and validation rules.
Receipt by electronic fee: Issued by natural persons who provide services independently.
Electronic sales ticket: Issued to final consumers. It does not allow you to exercise tax credit or support expenses for tax purposes, and its structure is less complex than that of electronic invoices.
Electronic purchase settlement: Issued by taxpayers who make purchases to natural persons who produce and/or collect primary products derived from agricultural activity, artisanal fishing and timber extraction, among others – as long as these sellers do not have their Unique Taxpayer Registration (RUC) number.
Electronic debit and credit note: The first is used to recover expenses or costs incurred by the seller, and the second to accredit cancellations, discounts or other modifications to invoices and electronic sales tickets previously issued.
Electronic public service receipt (SP electronic receipt): A special voucher issued by telecommunications, water, electricity and natural gas services, both in B2B transactions, giving entitlement to tax credit and to final consumers.
Proof of electronic withholding: Mandatory for use by taxpayers designated as withholding agents who carry out transactions subject to the General Sales Tax (IGV) withholding regime.
Proof of electronic perception: Proof of payment issued by the Perception Agent when they make the total or partial collection of the IGV to their customer or importer, either by purchase of fuel or by Internal Sales included in the Regime of Perceptions of the IGV.
Electronic referral guide Sender: Issued by the sender to support the transport or transfer of goods.
Electronic Referral Guide Carrier: Issued by the Carrier user in digital format to support the transport or transfer of goods, it is necessary to issue it per transport unit, by destination, per recipient and per sender.
Electronic referral guide per event: Issued by the sender or the carrier to complement another previously issued by the same subject due to facts not attributable to them.
Guide to Electronic Referral of controlled goods (BF): Supports the transfer of chemical inputs, products and their by-products or derivatives that are subject to control because they can be used, directly or indirectly, in the elaboration of illicit drugs. To find out if the products to be transported must be inspected, consult Supreme Decree No. 268-2019-EF.
Electronic authorised document (DAE): Proof of payment that allows you to sustain expenses or costs for tax purposes – as well as the possibility of exercising a tax credit, issued in accordance with the particularity of the operations, provided that the acquirer or user is identifiable and the tax is discriminated against.
SEE: Electronic issuance system Peru
There are multiple electronic issuance systems in Peru that help generate electronic payment receipts. These systems can be public, commercial or private. Here are the main systems:
SOL issuance system: SUNAT provides this free system, also known as SUNAT – Online Operations (SOL). This system has several limitations and is mainly aimed at small taxpayers and independent professionals who generate a low volume of CPE. It also has a SUNAT app and Emprender app.
Issuance system from the taxpayer’s systems: This issuance system is developed according to the taxpayer’s measures and needs. The issuance of the CPEs does not require access to the SUNAT web portal; the generation, remission and validation of the CPEs are carried out between the taxpayer’s systems and the SUNAT or OSE database.
SUNAT billing issuance system: This free application allows you to issue electronic receipts. It is aimed mainly at medium and small taxpayers with computerised systems and a high volume of billing.
Electronic services operator issuance system: The process of validating the CPEs generated by the taxpayer’s issuance systems requires entities authorised by SUNAT to electronically verify CPEs to be considered issued.
Supervised Companies Issuance Systems: Issues electronic receipts for public services. However, the issuers of these systems can choose to issue such vouchers through the issuance system from the taxpayer’s systems.
Participants in electronic issuance systems
Electronic sender
The taxpayer issues receipts electronically, either because they are required to or because they have voluntarily adhered to the system.
Acquirer or user
The consumer of goods and/or services to whom a CPE is issued and who must receive it in their capacity as a consumer. When the consumer is also an electronic issuer, they are an electronic acquirer, but if not, they are considered a non-electronic acquirer.
Electronic service provider (PSE)
The entity that provides services to the electronic issuer, on behalf of the issuer, to perform activities inherent in the electronic issuance of proof of payment. The corresponding accreditation is required before the SUNAT to be a PSE.
Electronic service operator (OSE)
OSE is an entity authorised by SUNAT and registered in the SBE Registry to electronically verify compliance with the essential aspects of what is issued in the SEE - SBE.
Timeline of e-invoicing in Peru
Peru took a phased approach when implementing e-invoicing, making the gradual rollout hard to follow. Here are the core dates:
January 2014: Phased implementation of e-invoicing begins
1 January 2018: Taxpayers that deduct or collect VAT, are identified as PRICO, or whose tax ID is contained in Appendix I to Resolution 155-2017 must participate in e-invoicing
1 May 2018: Taxpayers whose tax ID is contained in Appendix II to Resolution 155-2017 must participate in e-invoicing
1 August 2018: Taxpayers whose tax ID is contained in Appendix III to Resolution 155-2017 must participate in e-invoicing
1 November 2018: Taxpayers whose tax ID is contained in Appendix IV to Resolution 155-2017 must participate in e-invoicing
2022: Small and medium enterprises join the e-invoicing scheme
Penalties: What happens if I don’t comply with e-invoicing in Peru?
Failure to issue and/or provide payment vouchers or complementary documents under the terms of the provisions in force may result in the closure of the establishment.
Issuing or granting documents where printing or importation does not meet the requirements and characteristics may result in a penalty of approximately EUR 632 or closure of the establishment
What else do I need for VAT compliance in Peru?
Tax compliance in Peru is larger than e-invoicing, especially considering the importance of meeting VAT obligations.
Organisations’ demands grow significantly when staying on top of regulatory changes. Compliance requires meeting demands in both the present and the future, and this can be heavy on resources. That’s why Sovos is your compliance partner; we help you achieve global compliance through local expertise.
Sending e-invoices or electronic notes outside of the deadline to SUNAT means the document will not be considered legitimate – even if already delivered to the buyer.
Sending electronic documents outside of the deadline to the OSE means it will not verify the documents and they are not considered valid, even if already delivered to the buyer.
Setting up e-invoicing in Peru with Sovos
With electronic invoicing becoming more common globally, following the lead of Latin American countries like Peru, it is important that you prioritise compliance.
The global – yet fragmented – adoption of e-invoicing solidifies the need to choose a single vendor for complete compliance, wherever you do business. Sovos is a tax compliance partner you can trust.
Focus on what truly matters: speak with a member of our team today to begin reclaiming your time.
Complete the form below to speak with one of our e-invoicing experts
The Chilean Internal Revenue Service (SII) recently published version 4.00 of the document describing the format of electronic tickets for Sales and Services.
The electronic ticket (or Boleta Electrónica) is an electronic receipt issued for the sale of goods or services to individuals, consumers or end users.
The document includes basic information about the transaction, such as:
The seller’s tax identification number
A summarised description of the goods or services
The total amount paid
Applicable taxes
The electronic ticket is for less formal, business-to-consumer (B2C) transactions and is subject to less rigorous reporting requirements than electronic invoices (Factura Electrónica). It is often used for smaller transactions, such as retail purchases or services rendered to individuals.
Who is required to issue electronic tickets?
All taxpayers who issue sales and service receipts on paper
All taxpayers who start as a company must issue sales and service receipts to final consumers
Businesses must use certified invoicing software to generate electronic tickets. These software solutions need to be approved by the Chilean tax authority, the Servicio de Impuestos Internos (SII).
The generated electronic invoices must be digitally signed using an electronic signature to ensure their authenticity and integrity.
Taxpayers authorised as issuers of electronic tickets must digitally send all the electronic tickets issued and generated to the SII. These should follow the Technical Instructions provided in Annex 1 of Resolution 74 of 2020, and any future updates.
What’s required in an electronic ticket?
In accordance with the Technical Instructions, the electronic ticket must contain the following information:
The net amount of the transaction
VAT corresponding to the transaction
Business name of the company that made the sale
Single Taxpayer Registry (RUT) of the company
Single Taxpayer Registry (RUT) of the buyer
Date of issue
Merchandise breakdown: product sold, quantity, unit price and total sale
After generating the electronic tickets, businesses submit them to the SII. Since the SII must validate both the XML format of the document and its electronic signature, the SII has established a limit of 500 ballots per batch.
How electronic tickets can help businesses
On the other side of the transaction, the recipient of an electronic ticket can access and verify the invoice through the SII’s online platform. They can accept or reject the invoice, which helps maintain transparency and accurate transactions.
The data generated by this electronic receipt system drives efficiency. For example, businesses can obtain important information, such as:
The number of sales during a given time
The company’s sales flow
The number of tickets or transactions in different branches of the same business
Other data to help business decision-making
Businesses must maintain records for six years in the XML format established in version 4.00.
Non-compliance with the electronic invoicing requirements or submitting inaccurate information can lead to penalties. The SII has the authority to audit businesses to ensure compliance with tax regulations.
Need help for invoicing in Chile?
Are you in financial services or working at a bank with more questions about invoicing in Chile? Speak to our tax experts.
With the publication of Resolution 097-2023, the National Superintendency of Customs and Tax Administration of Peru (SUNAT) has established the procedure for refunding the general sales tax (IGV) to tourists.
The establishment of this facility previously required a series of reforms and adjustments to Peruvian regulations. This regulation is preceded by Supreme Decree No. 226-2020-EF which modified the regulations of the General Sales Tax and Selective Consumption Tax Law to incorporate tax refunds for tourists – defined as foreign natural persons not domiciled in the country and who remain for no more than 60 days.
At the beginning of 2023, SUNAT published Resolution 005-2023 through which the regulation of payment vouchers and the rules on electronic issuance were modified. The administration changed the rules to allow the issuance of invoices to tourists entering the country.
This invoice can be issued at authorised establishments when goods are sold. In this case, the identification data of the purchaser will not be RUC but a passport.
SUNAT published Resolution 091/2023 in April 2023 to establish rules for the Register of Authorized Establishments (REA) to regulate the registration, permanence and exclusion of taxpayers for the right to return the IGV to tourists.
VAT Refund Procedure for Tourists
On the date of their departure from Peru, tourists who have not exceeded the authorised time of stay in the country can initiate the return procedure with the collaborating entity. Tourists can use the self-management kiosk or the mobile application, which is available inside international air or sea terminals.
The VAT refund procedure for tourists is as follows:
The tourist must enter their identity document into the self-management kiosk or the mobile application. It must be the same one provided for their TAX FREE records. In the case of the mobile application, they must scan the QR code.
Select the certificates that correspond to the goods that the tourist bought and is taking abroad.
The system will assign the channel: red or green.
Red: The tourist must go to the SUNAT staff located at the checkpoint to show the identity document, the goods purchased and the electronic invoices that support their purchases.
Green: Validates that the credit or debit card number to pay the IGV refund corresponds to the tourist. This validation also applies to those who were assigned the red channel.
If the information is validated, the system generates the return request.
The payment to the credit or debit card will be made within five calendar days from the request being registered, discounting the commission that the collaborating entity charges for this service.
Checkpoint Enabled
The checkpoint has been enabled since 2 May 2023 in the pre-boarding control area on the first floor of the Jorge Chávez International Airport.
Argentina has recently expanded its perception VAT (Value Added Tax) collection regime to ensure efficient tax administration. It has included selling food and other products for human consumption, beverages, personal hygiene, and cleaning items under its scope.
The Argentinian Federal Administration of Public Revenue (AFIP) established this through Resolution No. 5329/2023 in early February 2023.
The new resolution aims to further expand the regime known as “Régimen de Percepción del Impuesto al Valor Agregado” to the categories related to food and other products for human consumption, beverages, personal hygiene, and cleaning items.
Taxpayers who issue invoices concerning these provisions must ensure compliance with the document data requirements, used as evidence of the collection for the final VAT calculation. This will be further discussed in this article.
Scope of the VAT Collection Regime
The VAT Collection Regime in Argentina is a scheme by which the seller, designated as “Collection Agent”, charges the buyer an amount additional to the sale price. As a result, the supplier will charge the fee on top of the purchase value, which includes the price and the VAT.
This new regime obliges VAT-taxable persons to act as collection agents when selling food products for human consumption, beverages, personal hygiene and cleaning items. A few exceptions include meats, fruits and bread made exclusively from wheat flour, among others. Taxable people registered for VAT purposes will also be subject to this regime when acquiring said products.
Applicable rates
The collection regime will only apply when each transaction amount exceeds ARS 3000.
The fee amount is determined by applying 3% to the net price of the operation resulting from the invoice or equivalent document.
This percentage will be 1.50% in the case of operations taxed with a rate equivalent to 50% of the general VAT tax rate.
Reporting and invoices as proof of perception
The information and payment of the perceptions carried out under this regime will be reported through the Withholding Control System (SICORE), using code 602.
The resolution also establishes that the only valid document to prove the payment of the perceptions will be the invoice or equivalent document (issued under the current invoicing regulations). The document will record the amount received in a discriminated manner and with express mention of this regime.
Those taxable persons using “Fiscal Controllers” documents of “New Technology” to comply with the provisions of the preceding paragraph must use the section “Other Taxes” on the document.
Implementation date
The collection regime will be applicable for taxable events perfected as of 1 April 2023. As a result, sellers of food and other products for human consumption, beverages, personal hygiene and cleaning items will charge the buyer an additional 3% or 1.5% as appropriate on the sale price according to the applicable fee.
Customers can securely process high volumes of documents for billing and electronic validation in real- time
BOSTON – October 5, 2022 – Global tax software provider Sovos today announced it has acquired Lima, Peru-based Escontech, one of the main leaders in the country in SaaS electronic invoicing and validation services for the issuance of electronic receipts. In the last five years, the company has specially focused on the integration of transactional solutions in Information Technology using world-class standards, achieving in the last two years the fastest growth in the ecosystem of Peruvian companies that provide this type of specialized services.
Escontech’s technology and positioning in the Peruvian market strengthen Sovos’ current capabilities and scope in this type of services, by efficiently covering and supporting major companies in areas such as banking, financial services, insurance, mass market, tolls, and other high transaction industries. The company has been approved as an Electronic Services Provider and Operator by the Peruvian Tax Administration (SUNAT), which allows it to support its users in the issuance, transformation and final computer verification of invoices, bills, and other electronic payment vouchers from a company’s administrative systems.
“Escontech will play an important role in our ability to provide customers in these regions, as well as globally, with the technology needed to process high volumes of documents securely for billing and electronic validation, while ensuring compliance with local regulations. These solutions will be a great complement to Sovos’ existing portfolio, simplify the integration process and be supported by the best professional services group in the industry,” said Alvaro Gonzalez, managing director, Latin America.
Leading companies and institutions rely on Escontech to validate their transactions quickly and securely, paving the way for frictionless commerce business environment. Together, Escontech and Sovos will help lead the fight against fraud while ensuring compliance in highly regulated industries.
“The group of professionals that make up the productive force of Escontech value with great enthusiasm to be part of a great global organization and leader such as Sovos. Since our beginnings in the provision of this type of specialized transactional services, we have sought to innovate with value, by delivering a user experience of quality and excellence, but mainly, of commitment and closeness. Now with Sovos’ vision, its technological and financial resources, its multi-territory presence, and its specialized human talent, we will contribute more efficiently to delivering satisfactory experiences to users in different areas and geographies,” said Rogelio Martinez, founder of Escontech.
Sovos is owned by Hg, the London-based specialist private equity investor focused on software and service businesses, and TA Associates. The terms of the deal were not disclosed.
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About Sovos
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe and is owned by Hg and TA Associates. For more information visit www.sovos.com/es and follow us on LinkedIn and Instagram.
About Escontech
Escontech is a company dedicated to the integration of information technology and security solutions through world-class standards. Throughout its history, the company has incorporated a special group of human talent that in the last 16 years has provided services to leading companies in Colombia, Ecuador, Peru, Venezuela, and the Caribbean.
With the entry into force of resolutions SAT-DSI-1240-2021 and SAT-DSI-1350-2022, most taxpayers in the country are now obliged to issue electronic invoices under the Online Electronic Invoice System (Regimen de Factura Electronica en Linea – FEL).
The latest taxpayers to join the mandatory electronic billing system are include taxpayers incorporated into the General Value Added Tax (VAT) Regime and the group of natural and legal persons registered in the Small Taxpayer Regime.
With the addition of these last two groups, the Superintendence of Tax Administration of Guatemala (SAT) has practically completed the gradual process of incorporation into the country’s electronic invoicing regime.
Today, the general population should only accept FEL documents from obligated taxpayers. Paper invoices (preprinted) are no longer valid, making them unusable for transactions such as tax credit, among others.
The operating model and the rules applicable to the online electronic invoice of the Republic of Guatemala includes the issuance, transmission, certification, and preservation by electronic means of invoices, credit and debit notes, receipts, and other documents authorised by the Superintendence of Tax Administration, known as Electronic Tax Documents (DTE).
Electronic documents
The following tax documents are available for issuance under the Regimen de Factura Electronica en Linea – FEL:
Sales Invoice
Exchange Bill
Small Taxpayer Invoice
Small Taxpayer Exchange Invoice
Special Invoice
Agricultural Taxpayer Invoice
Agricultural Taxpayer Exchange Invoice
Small Taxpayer Invoice Electronic Regime
Exchange Invoice Small Taxpayer Electronic Regime
Agricultural Taxpayer Invoice Special Electronic Regime
Agricultural Taxpayer Exchange Invoice Special Electronic Regime
Credit Note
Debit Note
Credit Note
Donation Receipt
Receipt
Guatemala e-invoice issuance process
The Guatemalan system follows e-invoice clearance system, the well-established trend in LatAm countries. The clearance system means that the tax authority must authorise the electronic documents before the issuer is able to send them to the recipient.
The issuance process goes through the following mandatory steps:
The taxpayer issues the document with an electronic signature, and it is sent to the certifier automatically.
The certifier receives, validates, and authorises each document, which is automatically sent to the issuer and to the SAT.
The issuer delivers the document to the receiver or client.
The SAT verifies each electronic tax document and makes it available to the issuer and receiver for consultation and verification.
Archiving
The SAT store all invoices. This does not exempt senders and receivers from keeping the XML file for the period of four years, established in the Tax Code. The certifiers are also obliged to keep the certified DTE files in XML format, as well as the respective acknowledgments of receipt from the SAT.
Implementation
Now 98.23% of the total billing of the General VAT Regime is using FEL, with only around 20,000 businesses needing to migrate to the system since it was first launched in 2020.
Online e-invoices for all remaining VAT registered business will be mandatory from 1 April 2023 via the FEL.
Invoicing in Chile is changing on 1 December 2022. This is when resolution 66 from the Chile Internal Revenue Service comes into force.
This new regulation concerns organisations with foreign currency operations. Banks, stockbrokers, exchange houses and financial institutions are affected. Other intermediaries or entities that carry out foreign currency purchase and sale operations themselves or on behalf of third parties are also included.
All these organisations must issue the following:
Electronic invoice
Invoice Not Affected or Exempt Electronic
Electronic Credit Note
Electronic Debit Note
Electronic Ticket
Electronic Ticket Not Affected or Exempt
How is invoicing in Chile changing?
Every electronic tax document must consider the specifications described by “Electronic Tax Document Format”. This document is available on the Internal Revenue Service’s website and is regularly updated.
What electronic information is required in Chile?
Resolution 66 also contains technical instructions. These establish the details necessary for electronic tax documents that support foreign currency purchase and sale operations.
The resolution states the following must be included:
Name and code of the traded currency
Transaction type and detail
Exchange rate
Amount traded
Total value
Date of the transaction
There are other requirements not listed above, so it’s important to check the guidelines.
This change allows the Internal Revenue Service to receive, validate, and process electronic tax documents. This ensures the operations are accurately reflected and prevents inconsistencies.
More on rights, commissions and other charges in Chile
In the case of commissions, the taxpayer must issue an invoice or electronic ticket containing all the information indicated by the Technical Annex.
If the document doesn’t include an affected item, consider the following:
Likewise, when differences in collections and values are subject to VAT, an electronic credit or debit note must be issued.
The following information must be recorded separately as well:
The total value of the instruments traded
Value of commissions and charges, if any
Total to be paid in favour of the client or total to be paid in favour of the company
Need help for invoicing in Chile?
Are you in financial services or working at a bank with more questions about invoicing in Chile? Speak to our tax experts.
Update: 2 March 2023 by Kelly Muniz
Postponement of EFD-REINF Deadline for Events Referring to Withholding IRPF, CSLL, PIS and COFINS
The publishing of Normative Instruction RFB n. 2.133, of 27 February 2023 postpones the deadline of the obligation to submit EFD-REINF (Digital Fiscal Record of Withholdings and Other Fiscal Information) events related to withholding:
IRPF (Personal Income Tax)
CSLL (Social Contribution on Net Income)
PIS (Social Integration Program)
COFINS (Contribution for the Financing of Social Security)
This postponement refers to taxpayers who are currently obliged to submit the DIRF (Withholding Income Tax Return) and were required to comply with the EFD-REINF obligation from March 2023.
The obligation to submit the EFD-REINF for these taxpayers will now begin from 8:00 am on 21 September 2023, in relation to taxable events that occur from 1 September 2023.
The postponement is to allow time for taxpayers to carry out adjustments to their computerised systems and for the Brazilian Federal Revenue Agency to finalise the necessary tests to guarantee the consistency of the rules for validating the information captured in the record.
Since 2007, the Brazilian government has imprinted high efforts in digitizing the relations between revenue offices and taxpayers, by introducing electronic instruments to ensure taxpayers provide accurate and timely information on the collection of the various existent taxes, duties, charges, and contributions.
One result of such efforts was the creation of the Public Digital Bookkeeping System (Sistema Público de Escrituração Digital) or SPED. This platform is where taxpayers submit fiscal and accounting information using different electronic instruments referred to as SPED modules.
There are significant upcoming changes to one of the modules, the Digital Fiscal Record of Withholdings and Other Fiscal Information (Escrituração Fiscal Digital de Retenções e Outras Informações Fiscais), known as EFD-REINF.
The latest regulatory updates within this module concern steps towards the substitution of other records by the EFD-REINF, with important changes taking place in 2023.
Main changes in the EFD-REINF
In August 2022 version 2.1.1 of the EFD-REINF layout was introduced, expanding the reach of events covered by the record. The current 1.5.1 version is valid until February 2023 and from March 2023 layout version 2.1.1 must be used.
The main change is the inclusion of the ‘R-4000’ series events. These events cover the registration of withholdings on income tax (IR), Social Contribution on Net Income (CSLL), Social Integration Program (PIS), and Contribution to the Financing of Social Security (COFINS), among other fiscal contributions.
Another relevant change is the removal of the requirement to submit the EFD-REINF ‘without movement’. Previously, only a certain group was permitted for this exemption if they didn’t generate any records to be reported in the respective declaration period but this has now been expanded to all taxpayers in scope of the EFD-REINF.
New obliged taxpayers
Earlier this year, RFB Normative Instruction n. 2.096 of 2022 postponed mandatory submission of the EFD-REINF for the fourth and last group of taxpayers: entities that are part of the ‘Public Administration’ and entities classified as ‘International Organisations and Other Extraterritorial Institutions’. Since August 2022 this group is now obliged to comply.
However, the same regulation established that from 1 March 2023 taxpayers currently obliged to submit the DIRF (Withholding Income Tax Return) will be required to comply with the EFD-REINF obligation. This is an extensive list found in article 2 of RFB Normative Instruction n. 1.990 of 2020, which includes individuals and legal entities that have paid or credited income for which Withholding Income Tax (IRRF) has been withheld and certain entities of the Federal Public Administration, among others.
Finally, the annual submission of the DIRF will be abolished regarding events that occur from 1 January 2024, meaning that taxpayers won’t be required to submit it in 2025. Until then, the information declared in the DIRF and EFD-REINF will coexist.
Compliance challenges
Keeping up with the mosaic of fiscal requirements within the federal, state, and municipal levels in Brazil normally requires engaging the services of an expert or risk incurring high penalties. Modifications to fiscal obligations are implemented regularly in the country, which means companies must ensure readiness to comply.
A complement to eSocial (which covers tax withholdings on wages), EFD-REINF reports withholdings made to individuals and corporations resulting from the application of the income tax and social security taxes (CSLL, INSS COFINS, PIS/PASEP). It also applies to payments received by sport associations and revenues generated by sport events.
EFD-REINF replaces reporting obligations that the Brazilian taxpayers have to comply with under the EFD-Contribucoes.
Who must comply?
Legal entities:
That provide and contract outsourcing services in accordance with art. 31 of Law No. 8,212 of July 24, 1991
Who are responsible for withholding the social security taxes PIS/Pasep, the Cofins and the CSLL
Opting for payment of social security contribution on gross revenue (CPRB)
Entities considered rural producers and agro-industries when subject to substitutive social security contribution on the gross revenue from the commercialization of rural production
Sports associations that have professional soccer teams receiving revenues related to sponsorship, licensing of use of brands and symbols, marketing, advertising and broadcasting of sports shows
Sponsors that provide resources to those sports association
Entities marketing any sport event held in Brazil, involving at least one sport association that owns a professional soccer team
Entities and individuals that have paid or credited income on which the federal income tax has been withheld by themselves or as representatives of third parties
How is the EFD-REINF structured?
There are three groups of reports, or “events,” that must be submitted to the tax administration:
Table Events (Eventos de Tabela): Intended to optimize and validate the information that identifies the taxpayer and some administrative and legal processes that may affect them (if they exist).
Non-Periodic Events (Eventos Não Periódicos): Information related to transactions that do not occur on a regular basis and therefore should only be reported when they occur.
Periodic Reports (Eventos Periodicos): Events related to periodic information that should be reported on a regular basis by the taxpayer. These include:
Withholdings for Social Security tax for services received
Withholdings for Social Security tax for services provided
Revenues received by sport associations
Revenues Transferred by sport associations
Social Security tax on gross receipts
Withholding taxes (IR, CSLL, Cofins, PIS/PASEP)
When does it go into effect?
The EFD- REINF is being rolled out in three stages.
May 1, 2018: Companies with revenues greater than 78 million Real annually
November 1: Companies with revenue less than 78 million Real
May 1, 2019: All public entities
What are the penalties for non-compliance?
Events that are incomplete, or reported with errors, will a face fines totaling 3% of the amount involved, with a minimum of $100 Real in the case of legal entities, and half of the above amounts when the taxpayer is an individual. Fines for late reports will range between from $500 Real to $1,500 Real per month or fraction of month.
More taxpayers join the Electronic Invoicing System of Paraguay (SIFEN)
Since Paraguay started implementing its National Integrated System of Electronic Invoicing (SIFEN) plan in 2017, the Undersecretary of State for Taxation of Paraguay (SET) has carried out the process.
The different phases are:
Pilot plan
Voluntary phase
Mandatory implementation
Due to the arrival of SET resolution 105/21, numerous companies have been voluntarily incorporated into the system. This is to prepare for mandatory electronic invoicing in 2023. SET resolution 105/21 provides measures for the issuance of electronic tax documents and an implementation calendar for 10 groups of taxpayers.
More than 80 million electronic documents have been issued since the system started operating. With resolution 105/2021 coming into force, it is expected that over 5,000 taxpayers must issue their receipts electronically by 2023.
How the SIFEN Works
The SIFEN is oriented towards large and medium-sized invoice issuers, whether they join voluntarily or are mandatorily designated by the Sub-Secretary of State for Taxation (SET).
The system contemplates two moments in its operation flow:
Commercial operation with electronic documents
Transmission of electronic documents to the SET
In the first moment, because of the commercial operation, the obliged taxpayer issues the digitally signed electronic document and sends it to the buyer or receiver in XML format. The issuer must make available a graphic representation of the document (KuDE) that supports the transaction in a physical or digital format if the buyer or recipient is not operating under the SIFEN.
The second moment comprises taxpayers’ transmission of the digitally signed XML document to the SET for its approval process.
SIFEN’s operating model is deferred, meaning that the issuer of an electronic invoice must transmit the electronic documents in an XML file for their respective validation. This needs completing within 72 hours of the electronic document’s signature – any later and it will be considered as extemporaneous transmission and subject to penalties.
Electronic documents acquire the nature of Electronic Tax Documents (DTE) with legal validity and tax incidence once signed and authorised by the Tax Administration by means of an approval transaction number.
Mandatory and Voluntary Adoption
Resolution 105/2021 expands the list of those required to advance with the mass use of electronic invoicing, establishing the dates from which 10 groups of taxpayers must electronically issue all tax documents.
In accordance with the calendar established by the resolution, the companies participating in the pilot phase and voluntary adhesion became mandatory for electronic invoicing as of 1 July 2022.
The other taxpayers made up of groups 3 to 10 must implement electronic invoicing according to the schedule that begins with group 3 on January 2 January 2023, and ends with Group 10 on 1 October 2024.
More information on the taxpayer groups is available on the SIFEN web portal.
Voluntary adoption is possible for all taxpayers who wish to issue invoices electronically via the SIFEN. The minimum requirements are for companies to use software that integrates with the SIFEN and holds a valid Digital Signature certification.
Paraguay’s New E-invoicing System to Gradually Become Mandatory From July 2022
The electronic invoicing system in Paraguay has been in development since 2017 according to the plan carried out by the Undersecretary of State for Taxation (SET) to modernise and improve tax collection and minimise the incidence of tax fraud.
The introduction of the Integrated National Electronic Invoicing System (Es. Sistema Integrado de Facturación Electrónica Nacional -SIFEN –) meant the introduction of a new e-invoicing regime in the country. The adoption of this new system is currently in its voluntary adhesion phase, which began in 2019, and has allowed entrepreneurs, merchants, and companies to issue e-invoices optionally. However, from July 2022, the use of the system will gradually become mandatory for certain taxable persons.
Electronic Tax Document types
Taxpayers in Paraguay can use the SIFEN to issue Electronic Tax Documents (Es. Documento Tributario Electrónico – DTE). The DTE is a digital version of the invoice and other traditional documents, which has tax and legal validity. The DTE has become a modern, effective, secure and transparent form to issue and manage e-invoices for distinct types of business operations.
The DTEs are validated upon issuance by the SAT to support the VAT deductions and transactions related to income tax. Among the distinct types of DTE in Paraguay, we find:
Electronic sales documents:
Electronic invoice
Export electronic invoice
Import electronic invoice
Complementary electronic documents:
Electronic self-invoicing
Electronic debit note
Electronic credit note
The DTE issuance process
The e-invoices issued by the taxable persons that have adhered to the SIFEN are generated in XML format. The authenticity and integrity of each document are guaranteed through the digital signature and the control code that DTEs include. Each document must be sent electronically to the tax administration for its clearance.
The SIFEN is responsible for verifying and validating each document. Once it is established that the DTE meets all the requirements, it becomes a legal e-invoice. The taxable persons issuing the e-invoice then receive the verification results through the web service system.
After the e-invoice is cleared, suppliers can send the DTE to their buyers via email, data messaging or other means.
Paraguay E-invoicing mandate roll-out
The Paraguayan Undersecretary of State for Taxation recently published a General Resolution providing administrative measures for the issuance of DTEs. This resolution also established a phased schedule of implementation, in which certain taxable persons will be required to issue e-invoices and other DTEs using the SIFEN.
The implementation schedule consists of ten stages starting on 1 July 2022 with all taxpayers who joined the pilot program to adopt the SIFEN. From January 2023, the mandate will include more taxpayers. However, it is not yet defined which companies will start in that stage. The SET aims to cover all taxpayers carrying out economic activities in the country by October 2024.
What’s next
Companies in Paraguay must get ready to issue e-invoices under the requirements of the SIFEN. From 1 July 2022, all companies in the country will be able to use this system voluntarily. The list of taxpayers required to comply with the mandate will be available on the SIFEN website and on the SET website (www.set.gov.py). The SET will notify affected taxpayers via the Paraguayan Tax Mailbox known as “Marandu.”
Take Action
Get in touch with our team of experts today to ensure compliance with the latest Paraguayan e-invoicing regulations.
Many multinational companies find VAT compliance challenging, especially when trading cross-border.
With the increase in real-time reporting across Europe and differing VAT registration and reporting requirements, VAT compliance now requires significant resources and specialist knowledge to ensure compliance and avoid costly penalties.
As your business expands, so do your VAT obligations. This is why many organisations, turn to managed service providers to ease the burden of VAT compliance, audits and fiscal representation.
This e-book discusses the many elements of VAT compliance including:
VAT registration
Fiscal representation
How to determine VAT obligations
Filing VAT returns
Preparing for an audit
Managing VAT changes
VAT compliance advice from JD Sports’ Indirect Tax Manager
How JD Sports manage VAT compliance with Sovos’ Managed Services
John Dowd, Indirect Tax Manager at sport-fashion retailer JD Sports discusses how he managed cross-border VAT compliance with the help of Sovos’ managed services
“For us at JD Sports and me personally I’m looking for a partnership, something long term, as it takes time and costs money to change advisors. I’m looking for a long-term relationship over a number of years with a VAT service provider.
“I want my advisor to have specialist knowledge, for us that’s retail and cross-border supply chains, overseas tax authorities, and I want to see new talent joining the team. I prefer a single point of contact to make it easier to move things along and of course, competitive pricing, and Sovos ticked all of these boxes for us.”
John Dowd, Indirect Tax Manager at JD Sports
The many elements of VAT compliance
VAT compliance has many elements, beginning with an understanding of place of supply rules to determine where VAT registration is required. Fiscal representation might be required to register in EU Member States.
Once VAT registration is underway, the next step is to determine EU VAT obligations by mapping the supply chain for the country of registration. There are also additional requirements to consider including exemptions, recovering VAT, Intrastat and varying continuous transaction controls (CTCs) mandates.
Submitting VAT returns to ensure compliance is a never-ending process. Each country has its own VAT return regulations and additional declaration requirements.
The VAT compliance cycle also includes preparation for VAT audits. Tax authorities can carry out audits for a variety of reasons so it’s important businesses prepare for audits and ensure they are able to manage the process successfully.
How Sovos VAT Managed Services can help with VAT compliance
Sovos’ end-to-end, technology-enabled VAT Managed Services can ease your compliance workload and mitigate risk where-ever you operate today, while ensuring you’re ready to handle the VAT requirements in the markets you intend to dominate tomorrow.
Many tax authorities are increasing their focus on the insurance industry in an effort to close tax revenue gaps, with many introducing Insurance Premium Tax (IPT) and other indirect taxes for insurance. Globally, IPT is fragmented across over 200+ countries and achieving compliance can be a complex process requiring specialist knowledge.
Insurers, especially those operating across multiple territories, can find keeping up to date with the latest IPT rates, rules and regulations to ensure compliance challenging.
This guide provides a helpful snapshot of the indirect tax rules that apply to insurance premiums across Europe.
The guide provides a useful reference of indirect rules across Europe including:
Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaca, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Switzerland, United Kingdom.
Insurance Premium Tax compliance
The digitization of tax is a trend that will undoubtedly continue. Organisations need to prepare for any changes to reporting as this will impact compliance obligations for the countries they operate in.
Tax authorities have increased their focus on the insurance industry to ensure IPT and parafiscal taxes are collected correctly, accurately, and on time.
Operating in multiple countries inevitably means also having to comply with many local regulations in line with IPT statutory and parafiscal filing. Compliance regimes can be simple or complex, but the difficulty is that they’re varied.
Welcome to the 13th edition of Sovos’ annual Trends report where we put a spotlight on current and near-term legal requirements across regions and VAT compliance domains.
This report provides a comprehensive look at the regulatory landscape as governments across the globe are enacting complex new policies to enforce VAT mandates. It examines the demanding and unprecedented insight now required into your economic data so that regulatory authorities enforce standards and close revenue gaps.
This year’s report examines the evolution of law and practice around the four emerging megatrends that Sovos experts identified in the 12th edition. These trends, many of which revolve around tax compliance and controls being ‘always on’, have the potential to drive change in the way organizations approach regulatory reporting and manage compliance.
Authored by a team of international tax compliance experts, we provide extensive recommendations on how companies can prepare for and thrive through these changes.
Get the report
The four mega-trends that we examine are:
Continuous Transaction Controls (CTCs) – Countries with existing CTC regimes are seeing improvements in revenue collection and economic transparency. Now, other countries in Europe, Asia and Africa are moving away from post-audit regulation to adoption of these CTC-inspired approaches. The report highlights how countries like France and Hungary have accelerated their transition to CTCs, and how many jurisdictions are combining invoice controls with CTC transport documents, thereby expanding their real-time reach from financial to physical supply chains.
A shift toward destination taxability for certain cross-border transactions – Cross-border services have historically often escaped VAT collection in the country of the consumer. Due to a large increase of cross-border trade in low-value goods and digital services over the past decade, administrations are taking significant measures to tax such supplies in the country of consumption or destination.
Aggregator liability – With the increase of tax reporting or e-invoicing obligations across different taxpayer categories, tax administrations are increasingly looking for ways to concentrate tax reporting liability in platforms that naturally aggregate large numbers of transactions already. Ecommerce marketplaces and business transaction management cloud vendors will increasingly be on the hook for sending data from companies on their networks to the government, potentially even inheriting liability for paying their taxes. The report notes how the July 2021 introduction of sweeping changes in e-commerce VAT legislation via OSS and IOSS are confirming this trend.
E-accounting and e-assessment – Combining CTCs with obligations to synchronize entire accounting ledgers makes onsite audit necessary only in cases showing major anomalies across these rich data sources. Over time, the objective is for VAT returns and other tax reports to be prefilled by the tax administration based on taxpayers’ own, strongly authenticated source system data. A brief deep-dive into the origins and potential future of SAF‑T shows how this trend is evolving to become a solid companion to CTCs globally.
CTCs have emerged as the primary concern for multinational companies looking to ensure compliance despite growing diversity in VAT enforcement approaches. Tax authorities are steadfast in their commitment to closing the VAT gap and will use all tools at their disposal to collect revenue owed. This holds especially true in the aftermath of COVID-19, when governments are expected to face unprecedented budget shortfalls.
The potential costs and risks associated with the trends highlighted in the report cannot be effectively mitigated with a reactive or opportunistic approach. The digital transformation of tax administration can – if approached as just an evolution of the legacy ‘post audit’ VAT world – significantly contract the digital transformation of businesses. This report suggests an analysis framework that companies can use to ensure ongoing VAT compliance whilst maximizing the opportunities of modern information and communication technologies for their own benefit.
In addition, Trends includes a major review of the country and regional requirement profiles. These profiles provide a snapshot of current and near-term planned legal requirements across the different VAT compliance domains.
As managing director for the Americas region, Alvaro leads multiple Sovos initiatives, including integrating acquired companies and technologies into our strategic solutions and product offerings. Alvaro believes that adopting a client first approach helps to better understand customer needs and focus on solving specific problems across regions.
Alvaro joined Sovos from its acquisition of Acepta, where he served as CEO. During his tenure, he guided the company to a leadership position in the issuance of electronic invoices, e-documents and digital identity in Chile. Now with Sovos, he sets the strategy to bring these services to all of the SSA region.
Creating a culture with a singular focus on solving customer problems is something Alvaro is passionate about. He views his role as bringing together a talented group of people, tapping their full potential and providing them with the tool necessary to be successful. The opportunity to build a new team inside Sovos has inspired him to begin a new journey of problem solving.
When not in the office, you’ll find Alvaro playing golf, tennis or running. He also keeps busy by teaching tennis to his three kids.
With more than 15 years of experience leading management, financial and strategic advisory projects in various global companies, Rodolfo Esquivel is responsible for directing Sovos’ commercial operations in the region and leading the mergers and integrations of the company’s new acquisitions. helping to strengthen the commitment with Sovos Latin America customers.
Economist from the American University, in the United States, with a diploma in finance from the Adolfo Ibáñez University in Chile and a specialization in International Financial Reporting Standards (IFRS) from the Diego Portales University, his background in consulting includes business finance, transaction services and assistance for financial and strategic clients.
His career includes the positions of Transaction Services Manager at PWC Consulting, Senior Business Development Manager at Honeywell, Corporate Finance Director at Glitnir Capital, Corporate Management Director at Deloitte Consulting, Corporate Finance Partner at EY and Director of Agricultural Land Corporation finances.
Paulo Castro has held the position of Country Manager for Sovos Brazil since 2018. He has more than 26 years of experience in the information technology market, in highly competitive segments and in business transformation projects.
He began his career at IBM in the PC area and held various managerial and executive positions in Brazil and Latin America. After 20 years he joined SAP Brazil, where he served for 5 years as Vice President of Sales.
His legacy has been to create highly motivated teams and business models aimed at exceeding set goals and generating sustained growth through the use of technological solutions and a commitment to the development and success of his team. He believes in the need to establish a clear strategy, in the team and in the daily execution. His main personal characteristics are discipline, resilience and creativity.
He is an engineer and holds a master’s degree in Business Administration from EAESP – FGV, with specializations at the Wharton School and the University of Cologne, in Germany.
This will address the tax challenges of an increasingly digital worldwide economy. As of 9 July 2021, 132 of the 139 OECD/G20 member jurisdictions have agreed to the Inclusive Framework on BEPS.
Pillar Details
Pillar 1
Pillar 1 gives a new taxing right, Amount A, to market countries to ensure companies pay tax on a portion of residual profits earned from activities in those jurisdictions, regardless of physical presence. Pillar 1 will apply to multinational enterprises (“MNEs”) with global turnover above 20 billion euros and profitability above 10%.
There will be a new nexus rule permitting allocation of Amount A to a market jurisdiction when the in-scope multinational enterprise derives at least 1 million euros in revenue from that jurisdiction. For jurisdictions with a GDP less than 40 billion euros, the nexus will instead be set at 250,000 euros.
The “special purpose nexus rule” determines if a jurisdiction qualifies for the Amount A allocation. Furthermore, countries have agreed on an allocation of 20-30% of in-scope MNE residual profits to market jurisdictions, with nexus using a revenue-based allocation key.
Revenue will be sourced to the end market jurisdictions where goods or services are consumed, with detailed source rules still to come.
More details on segmentation are still in the works, as is the final design of a marketing and distribution profits safe harbour that will cap the residual profits allowed to the market jurisdiction through Amount A.
Lastly, countries have agreed to streamline and simplify Amount B with a particular focus on the needs of low-capacity countries. The finalised details are expected to be completed by the end of 2022.
Pillar 2
Pillar 2 consists of Global anti-Base Erosion (“GloBE”) Rules that will ensure MNEs that meet the 750 million euros threshold pay a minimum tax rate of at least 15%. The GloBE Rules consist of an Income Inclusion Rule and an Undertaxed Payment Rule, the latter of which still needs to be finalised.
Pillar 2 also includes a Subject to tax rule, which is a treaty-based rule, allowing source jurisdictions to impose limited source taxation on certain related party payments subject to tax below a minimum rate. The rate will range from 7.5 to 9 percent.
When Will the Plan be Implemented?
There is currently a commitment to continue discussion, in order to finalise the design elements of the plan within the agreed framework by October 2021. Inclusive Framework members will agree and release an implementation plan.
The current timeline is that the multilateral instrument through which Amount A is implemented will be developed and opened for signature in 2022, with Amount A coming into effect in 2021. Similarly, Pillar Two should be brought into law in 2022, to be effective in 2023.
More Details to Come
Although the key components of the Two-Pillar Solution have been agreed upon, a detailed implementation plan that includes resolving remaining issues is still to come.
As many countries could be implementing these changes in the near future, it is important for businesses active in the digital economy to carefully track and understand the developments surrounding the OECD/G20 Base Erosion and Profit Shifting Project.
Moving goods from one place to another is a quintessential part of business. Manufacturers, wholesalers, transporters, retailers and consumers all need to carefully orchestrate the shipping and handling of raw materials, parts, equipment, finished goods and other products to keep business flowing. This supply chain harmony is what makes production and trade possible in society.
In Canada, the United States and most European countries, tax administrations don’t intervene much in these trade processes. Until recently, the same could be said about most countries of Latin America. But, with the rise and expansion of electronic invoicing mandates in the region, this is rapidly changing.
Most governments with mature e-invoicing mandates are now recognizing that these mechanisms and government platforms can be used as vehicles to understand where, what, how and when goods are being moved. The traditional electronic invoice, is no longer enough – and tax authorities are requiring businesses to report goods movements in real-time.
The implications are serious too. Goods moved on public roads without those documents are very likely to be seized by the authorities, and the owners and transporters will be subject to fines and other sanctions.
Brazil and Mexico lead the way
The country with the most sophisticated system in place is arguably Brazil. The MDF-e (or Manifesto Eletrônico de Documentos Fiscais) is a mandatory document required by the tax administration in order to audit the movement of goods in Brazil.
This purely digital document combines the information of an electronic invoice (NF-e) and the electronic documents that hauling companies issue to their clients (CT-e). This system became mandatory in 2014 and has since been expanded and modernized with a vast grid of electronic sensors and transponders placed in the public highways of Brazil, intended to ensure that every truck moving goods already has the corresponding MDF-e, NF-e and CT-e. In most cases, the authorities don’t need to stop the trucks to verify the existence of the document.
Mexico recently issued a new resolution requiring taxpayers delivering goods, or simply redistributing them, to have the corresponding authorization from the tax administration (SAT). Products delivered by road, rail, air or waterways need to have what is known as the CFDI with the Supplement of Carta Porte.
CFDI is the acronym for an electronic invoice in Mexico. That supplement of Carta Porte is a new attachment to the electronic invoice of transfer (Traslado) issued by the owners delivering products or to the CFDI of Income (Ingresos) issued by the hauling companies. Carta Porte will provide all the details about the goods being transported, the truck or other means being used, the time of delivery, route, destination, purchaser, transporter and other information. This new mandate will become effective on 30 September 2021. As is in Brazil, noncompliance with this mandate will result in hefty penalties.
E-transport elsewhere in LatAm
Chile also has a mandate requiring the delivery of goods to be pre-authorized by the tax administration. These tax authorized documents are locally known as Guias de Despacho (or dispatch guides) and since January 2020 they can only be issued in an electronic format.
There are some exceptions where the dispatch guide can be issued temporarily on a paper format by certain taxpayers. Also, in cases of contingency, taxpayers may be authorized to issue paper versions of the guide; however, that will not exempt the issuer of regularizing the process once the contingency is complete.
The content of the dispatch guide will vary depending on who issues it and the purpose of the delivery (sales, consignment, returns, exports, internal transfers etc.) but in general, delivery of goods in Chile without the authorized dispatch guide will be subject to penalties from the tax administration (SII).
Argentina has a federal level VAT and a provincial level gross revenue tax. To control tax evasion, both levels of governments exercise certain levels of control in the process of dispatching goods within their jurisdictions.
The tax authority’s system for controlling the flow of goods in public ways is not as encompassing as in Brazil, Chile and Mexico, but it is getting closer. Only the provinces of Buenos Aires, Santa Fe and Mendoza, plus the City of Buenos Aires, require authorization from the fiscal authority to move goods that originated in, or are destined to, their jurisdictions. For that, they require the COT (or Transport Operations Code) where all the data related to the products, means of transport and other information is included once the authorization is provided. The provinces of Salta, Rio Negro and Entre Rios are working on similar regulations.
At federal level, the AFIP (Federal tax administration) only requires pre-authorization for the delivery of certain products such as meat and cereals. But at this level too, the regulatory environment is changing.
The AFIP, along with the Ministry of Agriculture and the Ministry of Transportation have issued a joint resolution 5017/2021 that mandates the use of a digital bill of lading (Carta Porte Electronica) whenever there is a transfer of agricultural products on public roads in Argentina. This change will become effective on 1 November 2021. In 2022, this federal requirement may expand to other products.
LatAm sets the scene for electronic invoicing trends
The requirement of authorization for moving goods in LatAm is not limited to the largest economies of the region. Smaller countries with electronic invoicing systems have expanded, or are in the process of expanding their mandates to require taxpayers to inform the tax authority, before goods are moved as result of a sale or any other internal distribution.
For instance, Peru requires the Guias de Remision from taxpayers before they start the delivery of their products. This electronic document should be informed to and authorized by the tax administration (SUNAT) using the digital format established for that purpose and will include all the information about the product delivered, issuer, recipient, means of transport, dates and more.
Uruguay has the ‘e-Remitos’ which is an electronic document authorized by the tax administration (DGI). It is required for any physical movement of goods in Uruguay. As in other countries, this document will provide all the information about the goods being transported, the means used, the issuer, the recipient and additional data. It is electronically delivered and authorized by the tax administration using the XML schemas established for that purpose.
Lastly, in Ecuador the tax administration (SRI) requires the ‘Guias de Remision’ (Delivery Guide) for any goods to be transported legally inside the country. As the infrastructure to support the electronic invoice is not fully developed in Ecuador, in some cases the tax administration allows the taxpayer to comply with this part of the mandate by having the electronic invoice issued by the retailer delivering the goods to his clients. Even though Colombia and Costa Rica do not require a separate electronic document to authorize the transport of goods, it is expected that in the future, this requirement will come into effect, mirroring what has happened in many other countries of the region.
The common element of all these mandates in Latin America, is that all of them are closely knitted to the electronic invoicing system imposed in each country. They are basically seen as another module of the electronic invoice system where information regarding goods being transported by public roads, waterways, by rail or air should be submitted to the tax administration, via the XML schemas established for that purpose.
Tax administrations in the region are actively enhancing their systems to ensure that movements of goods are properly controlled in real time. In some cases, tax administrations have provided online solutions aimed at taxpayers with small numbers of deliveries. But for all other taxpayers, a self-deployed solution is required.
Enforcement of the mandate is made not only by the tax administration, but also by the police and the public roads authorities, both of which routinely seize goods for non- compliance. Since these mandates have proven to be successful to control tax avoidance and smuggling, it’s safe to say that the Remitos, Dispatch Guides, Carta Porte or COTs are here to stay for good and taxpayers doing business in Latin America have no option but to comply with this new regulatory requirement.
