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:

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:

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:

An example is when there is no commission.

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:

  1. The total value of the instruments traded
  2. Value of commissions and charges, if any
  3. 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: 25 October 2022 by Kelly Muniz

Changes in EFD-REINF Reporting

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.

Still have questions about Brazil’s EFD-REINF? Speak to our tax experts.

 

Update: 9 July 2018 by Ramón Frias

What is EFD-REINF?

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?

How is the EFD-REINF structured?

There are three groups of reports, or “events,” that must be submitted to the tax administration:

When does it go into effect?

The EFD- REINF is being rolled out in three stages.

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.

Take Action

To learn more about other changes impacting companies operating in Brazil and throughout Latin America, download the Definitive Guide to Error-Free Compliance in Latin America.

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:

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.

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.

Managed Services for VAT Compliance

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:

Download a copy of the VAT managed services e-book

Get the e-book

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.

Download the VAT managed services e-book

Indirect Tax Rules for Insurance Across the World

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 the world, including:

  • Europe
  • Asia
  • Africa
  • Australia and New Zealand
  • North America
  • South America

Download the Indirect Tax Rules for Insurance Across the World guide

Get the guide

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

And across Asia including:

Armenia, Azerbaijan, Bahrain, Bangladesh, Brunei Darussalam, Cambodia, Hong Kong, India, Indonesia, Israel, Japan, Kazakhstan, Korea (the Republic of) (South), Lao People’s Democratic Republic, Macau, Malaysia, Maldives, Mongolia, Myanmar, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Taiwan (Province of China), Thailand, Turkey, United Arab Emirates, Vietnam

Across Africa including:

Angola, Benin, Botswana, Burkina Faso, Congo, Egypt, Eritrea, Gambia, Ghana, Kenya, Libya, Mauritius, Mozambique, Namibia, Nigeria, Saint Helena, United Republic of Tanzania, Zambia, Zimbabwe

For Australia and New Zealand including:

American Samoa, Australia, Fiji, French Polynesia, Marshall Islands, New Caledonia, New Zealand, Wallis et Futuna

Across North America including:

Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Canada, Cayman Islands, Costa Rica, Curacao, Dominican Republic, El Salvador, Greenland, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Puerto Rico, Saint Kitts and Nevis, Saint Lucia, Saint Martin (French part), Saint Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, United States of America, Virgin Islands

And, finally, the indirect tax rules for insurance across South America including:

Argentina, Bolivia, Brazil, Chile, Ecuador, Falkland Islands, Paraguay, Peru, Uruguay, Venezuela

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.

Download our guide to ease this burden.

TRENDS AND UPDATES ON VAT COMPLIANCE

Trends 13th Edition 2022

TRENDS AND UPDATES ON VAT COMPLIANCE

Trends 13th Edition 2022

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

For more, see Alvaro’s LinkedIn profile.

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.

In the “Statement on a Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalization of the Economy” issued on 1 July 2021, members of the G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) have agreed upon a framework to move forward with a global tax reform deal.

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.

Take Action

Need to ensure compliance with the latest e-document regulations? Get in touch with our tax experts.

Download VAT Trends: Toward Continuous Transaction Controls to discover more about how tax systems around the world are evolving.

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.

Take Action

To find out more about what we believe the future holds, download VAT Trends: Toward Continuous Transaction Controls. Follow us on LinkedIn and Twitter to keep up-to-date with regulatory news and updates.

MEXICO E-INVOICING

Mexico has one of the oldest and most complex sets of electronic invoicing regulations in the world.

For more than a decade, Mexico has been a pioneer in electronic invoicing. The country’s clearance-model e-invoicing mandate is extremely comprehensive and therefore fraught with risk. 

Businesses simply cannot operate in Mexico without a complete e-invoicing system capable of integrating and automating all of the fiscal requirements (invoices, e-payments, COMEX, e-accounting) within their ERP systems.

Latest Changes

Complemento de leyendas supplements for virtual importation of product components (for example, tyres on cars or sugar in soda) are now required for maquiladoras, or American-owned factories operating across the Mexican border.
The process for cancelling a CFDI, or e-invoice, changed in November 2018 and requires suppliers to submit a cancellation request instead of credit notes to void a previously issued invoice/CFDI . In addition, it requires the buyer to accept or reject the request within 72 hours
The frequently used supplement of payment, which affects all transactions where a partial or complete payment is received after a CFDI is issued, took effect in September 2018.

Mandate Quick Facts

  • Clearance-model mandate requires government sign-off on each transaction in real time
  • Supplements, or complementos, with additional information about a transaction accompany e-invoices depending on the type of transaction
  • Electronic invoices must have a digital signature to authenticate the integrity of the invoice

Penalties

  • $300-$4,602 fine per missing or incorrect e-invoice
  • $15-$4,092 fine per invoice that does not match accounting records (eContabilidad)
  • Up to $200 fine for each transaction that should have been posted in the delinquent or inaccurate polizas
  • Increased risk of a direct audit by the Mexican tax authority (SAT) for compliance errors
  • Adjusted taxable income based on presumption of unreported income, resulting in interest, penalties and fines on the delinquent taxes owed – often 80% to 100% of the imposed tax deficiency
  • Potential for operational shutdowns

How Sovos Helps Companies Stay Compliant with Mexico E-invoicing

The Sovos e-invoicing compliance solution serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Mexico and across the globe. Combining disparate local solutions in countries around the world is both costly and risky. The Sovos SAP Framework Solution is tailored to manage specific e-invoicing scenarios in Mexico as well as handling requirements in other countries around the world. It allows companies to invoice seamlessly within SAP and also monitors both AR, AP, and e-accounting compliance processes, end-to-end, all within SAP.

Automatic population of SAP tables

The Sovos e-invoicing solution for Mexico extracts and publishes data according to government mandates and maintains all data in SAP so that companies can manage information in one place and be prepared for audits.

Certified for Namespace and SAP with a path to S/4HANA

The Sovos embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth.

70+ OEMs

Sovos e-invoicing compliance solutions integrate seamlessly with Ariba, Coupa and many other payment solutions.
Free Guide

Electronic Invoicing and Reporting Requirements in Mexico

For more details on the evolution and requirements of the mandate, download the guide on e-invoicing in Mexico.

Feature list

Easily configure the e-invoicing processes.

Sovos provides SAP expertise in countries around the world, eliminating the need for SAP customers to find and provide experts themselves.

E-invoicing compliance solutions tailored to market-specific requirements and scenarios.

The embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth. Sovos provides global reach with in-house regulatory expertise for both pre-clearance and post-audit transactional invoicing. When tax authorities introduce new or modify existing mandates, Sovos keeps track so SAP customers stay compliant, enjoy peace of mind and avoid business disruptions.

Functionality embedded in more than 60 leading global EDI and P2P networks, including SAP Ariba.

Sovos eInvoicing compliance works directly inside the most popular and most complex EDI and P2P systems, eliminating the need to fund and maintain expensive integration projects.

Change management function monitors and maintains the e-invoicing system.

Not only do SAP customers save money by not having to build internal SAP data extraction and mapping logics within SAP for their e-invoicing processes, they also don’t have to incur the significant costs of monitoring and maintaining those systems.

Reserved, native SAP namespace.

Built directly into SAP with its own namespace, the Sovos eInvoicing compliance solution delivers the tools SAP customers need to manage, control and monitor e-invoicing compliance processes in real time.

e-invoicing

Colombia’s tax authority, the DIAN, has introduced changes to its e-invoicing model

With lessons learned from the first iteration of e-invoicing in Colombia, the DIAN is implementing a clearance model similar to those in Brazil, Mexico and other LATAM countries.

The new model requires organisations currently invoicing electronically through SAP to implement the new model by 2 November 2019. Companies implementing e-invoicing for the first time should follow the guidance published by the DIAN in Resolución 000020, which requires compliance beginning on 1 August 2019 for many organisations.

Latest Updates​

The new mandate will employ a clearance model of e-invoicing, requiring real-time pre-validation. In that model, the supplier has to validate each invoice with the tax authority before it can ship goods to a client.
Inbound invoicing is now a requirement.
A new XML schema requires more than 200 validations, with new catalogues implemented to standardise data, and seven new acknowledgements.

Mandate Quick Facts

  • The mandate reduces VAT evasion by 50 percent, equal to 8 billion pesos (USD 2.8 billion)
  • The mandate has produced more than three million electronic documents worth more than 40 billion pesos (USD 13 billion)
  • For more details on the evolution and requirements of the mandate, download the guide on e-invoicing in Colombia

Mandate Rollout Dates

With the latest UBL 2.1 and pre-validation mandate published by the DIAN, dates for the implementation of clearance e-invoicing are as follows:

  • Companies that have not implemented e-invoicing have to go live between 1 August 2019 – 1 August 2020 according to resolution 020.
  • Companies currently invoicing electronically have to go live by 2 November 2019.

Penalties

Companies that do not comply with the e-invoicing mandate are subject to fines of up to 15,000 UVT, set based on the following criteria:

  • 5% of the invoice amount for which the required information was not provided
  • 4% of the invoice amount for information submitted in the wrong format
  • 3% of the invoice amount for late submissions
Free Guide

Electronic Invoicing & Reporting Requirements in Colombia

For more details on the evolution and requirements of the mandate, download the guide on e-invoicing in Colombia.

How Sovos Helps Companies Stay Compliant with Colombia E-invoicing

The Sovos e-invoicing compliance solution serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Colombia and across the globe. Combining disparate local solutions in countries around the world is both costly and risky. The Sovos SAP Framework Solution is tailored to manage specific e-invoicing scenarios in Colombia as well as handling requirements in other countries around the world. It allows companies to invoice seamlessly within SAP and also monitors both AR and AP compliance processes, end-to-end, all within SAP.

Certified DIAN technology provider

Sovos has earned certification from the DIAN. Companies doing business in Colombia must use a certified technology provider for e-invoicing functions. View certification

Certified for Namespace and SAP with a path to S/4HANA

The Sovos embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth.

Successful participant in Colombia pilot program

Sovos successfully implemented Colombia e-invoicing with large multinationals, including Coca-Cola, Kellogg, and S.C. Johnson.

Feature list

SAP localised monitors for easy configuration of e-invoicing processes

Sovos provides SAP expertise in countries around the world, eliminating the need for SAP customers to find and provide experts themselves.

Sovos e-invoicing compliance solutions localised to market-specific requirements and scenarios

The embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth. Sovos provides global reach with in-house regulatory expertise for both pre-clearance and post-audit transactional invoicing. When tax authorities introduce new or modify existing mandates, Sovos keeps track so SAP customers stay compliant, enjoy peace of mind and avoid business disruptions.

Functionality embedded in more than 60 leading global EDI and P2P networks, including SAP Ariba

Sovos eInvoicing compliance works directly inside the most popular and most complex EDI and P2P systems, eliminating the need to fund and maintain expensive integration projects.

Change management to monitor and maintain the e-invoicing system

Not only do SAP customers save money by not having to build internal SAP data extraction and mapping logics within SAP for their e-invoicing processes, they also don’t have to incur the significant costs of monitoring and maintaining those systems.

Reserved, native SAP namespace

Built directly into SAP with its own namespace, the Sovos eInvoicing compliance solution delivers the tools SAP customers need to manage, control and monitor e-invoicing compliance processes in real time.

Multi-lingual support

Sovos offers comprehensive customer support in the languages of countries with e-invoicing mandates around the world.

Customers

Brazil e-invoicing regulations

Brazil has a mature but extremely complex e-invoicing system

In 2008, Brazil adopted a clearance electronic invoicing model in which the country’s tax authority must receive and clear an invoice before a supplier can issue it to a payer. More than a decade later, the Brazilian tax administration’s digitisation has evolved so much that other tax administrations call Brazil the Google of fiscal goods. 

Current regulations include electronic invoices for: supplies of goods (NF-e), services (NFS-e), transport services (CT-e), freight (MDF-e), SPED, and  EFD REINF.

In order to reduce the risk of audits and supply-chain interruptions, companies doing business in Brazil need to adopt an e-invoicing system capable of integrating and automating all of the fiscal requirements within their ERP systems.

Have questions? Get in touch with a Sovos Brazil e-invoicing expert

Latest Changes

E-receipts issued by special cash registers are being replaced by new types of B2C e-invoices.
The tax administration is launching a new e-invoice type for suppliers of electricity.
REINF EFD v1.4 is being updated to v2.1, adding new books to reporting

Mandate Quick Facts

  • The first clearance e-invoicing model in South America.
  • All invoices must be in XML schemas predetermined by tax authorities.
  • Apart from the e-invoices, auxiliary documents may also be issued by suppliers.
  • Documents must be stored during the period prescribed by the law.

Penalties

  • Failure to issue an invoice, or issuing an invoice that does not meet the legal and technical criteria, will result in a penalty up to 100% of the invoice value or transaction price.
  • Failure to comply with invoicing obligations may result in criminal offense.

How Sovos Helps Companies Stay Compliant with Brazil E-invoicing

The Sovos e-invoicing compliance solution serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Brazil and across the globe. Combining disparate local solutions in countries around the world is both costly and risky. The Sovos SAP Framework Solution is tailored to manage specific e-invoicing scenarios in Brazil as well as handling requirements in other countries around the world. It allows companies to invoice seamlessly within SAP and also monitors both AR and AP compliance processes, end-to-end, all within SAP.

More than a decade of experience in Brazil

Sovos has provided services in Brazil for over 10 years. The Sovos platform covers billing, accounts payable, e-sign, VAT Reporting and VAT digital reporting, as well as e-receipts and accounts payable (AP) automation.

Certified for Namespace and SAP with a path to S/4HANA

The Sovos embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth.

70+ OEMs

Sovos e-invoicing compliance solutions integrate seamlessly with Ariba, Coupa and many other payment solutions.
Free Guide

Electronic Invoicing & Reporting Requirements in Brazil

For more details on the evolution and requirements of the mandate, download the guide on e-invoicing in Brazil.

Product List

eReceipts

Sovos provides a global solution for clearance-model electronic receipts, which requires B2C businesses to submit receipts to the government at the point of sale for VAT audit purposes.

AP Fiscal Automation

Sovos AP Fiscal Automation automates all inbound documents by matching PO against XML and automating procurement process, empowering companies to lower their procurement costs, reduce their risk and increase efficiencies when receiving goods from suppliers.

Feature list

Easily configure the e-invoicing processes.

Sovos provides SAP expertise in countries around the world, eliminating the need for SAP customers to find and provide experts themselves.

E-invoicing compliance solutions tailored to market-specific requirements and scenarios.

The embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth. Sovos provides global reach with in-house regulatory expertise for both pre-clearance and post-audit transactional invoicing. When tax authorities introduce new or modify existing mandates, Sovos keeps track so SAP customers stay compliant, enjoy peace of mind and avoid business disruptions.

Functionality embedded in more than 60 leading global EDI and P2P networks, including SAP Ariba.

Sovos eInvoicing compliance works directly inside the most popular and most complex EDI and P2P systems, eliminating the need to fund and maintain expensive integration projects.

Change management function monitors and maintains the e-invoicing system.

Not only do SAP customers save money by not having to build internal SAP data extraction and mapping logics within SAP for their e-invoicing processes, they also don’t have to incur the significant costs of monitoring and maintaining those systems.

Reserved, native SAP namespace.

Built directly into SAP with its own namespace, the Sovos eInvoicing compliance solution delivers the tools SAP customers need to manage, control and monitor e-invoicing compliance processes in real time.

AP Fiscal Automation.

AP Fiscal Automation automates all inbound documents by matching PO against XML and automating procurement process, empowering companies to lower their procurement costs, reduce risks and increase efficiencies when receiving goods from suppliers.

Sovos recently sponsored a benchmark report with SAP Insider to better understand how SAP customers are adapting their strategies and technology investments to evolve their finance and accounting organizations. This blog hits on some of the key points covered in the report and offers some direct responses made by survey respondents, as well as conclusions made by the report author. To get the full report, please download your complimentary copy of SAP S/4HANA Finance and Central Finance: State of the Market.

In this year’s benchmark report, research found that most companies are focused on reducing complexity and cost as a primary driver of their overall finance and accounting, including tax, strategies. With this reduction, they are working to solve their biggest pain point which continues to be a lack of visibility into financial transactions and reporting.

The survey revealed several key strategies and investments that SAPinsiders are prioritizing to evolve their finance and accounting processes and organizations. The number one driver of finance and accounting strategy in 2021 is to reduce cost and complexity. This was named by 57% of our audience as the top driver of their finance and accounting strategy. This jumped 24% from last year. To support their top drivers, a majority (56%) of the finance and accounting teams in the study plan to increase their use of automation in 2021.

Clean and harmonized data and a centralized single point of truth are the most important requirements that SAPinsiders are prioritizing. 83% of survey respondents report that clean data is important or very important, while 80% highlight the significance of the Universal Journal in centralizing critical information.

How do technology and tax intersect?

Continued complexity within core financial and accounting systems is limiting organizations’ ability to adapt rapidly to changing business conditions and provide real-time visibility into operations. That is why the number one driver of finance and accounting strategy based on this year’s survey is the pressure to cut both cost and complexity.

Survey responses and interviews with customers about their largest sources of pain consistently mention system and process complexity as one of their most significant challenges. Respondents are focused on addressing this obstacle in a variety of ways such as through investments in analytics, automation, centralization, and system consolidation.

This directly impacts how companies approach tax as rapidly changing global tax laws and mandates often have organizations playing catch up to ensure they are charging and remitting the proper amounts of tax to each country in which they operate. Failure to do this can lead to costly audits, potential fines and penalties and damage to brand reputation.

Why move to SAP S/4HANA Finance?

Simplicity, speed, and easy access to data were among the top benefits cited by survey respondents who have completed or nearly completed their move to SAP S/4HANA Finance. Several mentioned the ease with which they can go from high-level reports and drill down to the document or line-item level, making it easier to understand the numbers and perform in-depth analysis quickly. This directly aligns with the pain points that were identified in the benchmark report survey.

Why now?

What is clear from this survey and subsequent report is that complexity across all layers of finance is having a direct impact on a companies’ ability to function at the highest operational level possible and is threating to impact the bottom line.

Accounting for tax early in your migration strategies and technology upgrades is a key component to ensuring that you are prepared to handle the challenges of modern tax on an international scale. For companies that operate on a multi-national basis, having a centralized approach to tax with enhanced visibility and reporting capabilities is imperative to achieving and remaining compliant no matter how many changes to tax law are introduced every year.

Please download the full report for a more detailed explanation of these critical areas of focus.

 

Take Action

Ready to learn more about the impact SAP S/4HANA Finance can have on your tax organization? Download your complementary copy of the SAP S/4HANA Finance and Central Finance: State of the Market report for all the latest information.

On 1 May 2021, the Mexican tax administration (SAT) released one of the most important updates to the electronic invoicing system of the country since 2017.

The update was about the new Bill of Lading Supplement (locally known as Suplemento de Carta Porte) that should be added as an annex to the electronic invoice (CFDI) of Transfer (CFDI de Traslado) or to the CFDI of Revenues (CFDI de Ingresos) that are issued for hauling services.

This supplement is based on the provisions of Articles 29 and 29-A of the Fiscal Code of Mexico, and the rule 2.7.1.9 of the Miscellaneous Fiscal Resolution. The articles of the tax code grant the tax administration the power to define the documents to be used for supporting the legal transportation goods inside that country via specific rules. The mentioned rule describes the specific requirements of the Supplement of Carta Porte.

Why has Mexico introduced the Carta Porte supplement?

Latin American countries have a serious problem with tax evasion, usually made possible by smuggling goods without paying the corresponding taxes. According to the information provided by the SAT, 60% of the goods transported in Mexico have an illegal origin.

Therefore, the purpose of enforcing the use of the Carta Porte supplement, whether as an annex to the CFDI of Transfers or the CFDI of Revenues, is to ensure the traceability of the products moved inside the Mexican territory by requiring the provision of additional information about the origin, location, precise destination and routes of transport of the products transferred by roads, rail, water or air in Mexico.

Once this change comes into effect, transporters of goods by road, rail, water or air must have a copy of the Supplement of Carta Porte in the vehicle that proves lawful compliance with this mandate.

Who is required to issue the Carta Porte supplement?

When will the supplement become mandatory and when should it be issued?

The Carta Porte as a supplement of the CFDI of Transfers or the CFDI of Revenues

As we know, the new regulations require the Carta Porte supplement to be added to the CFDI of Transfers or to the CFDI of Revenues, depending on who is transporting the goods.

The Carta Porte supplement will be added to the CFDI of Transfers when the transport of goods is made by the owner (i.e. internal distributions between warehouses and stores, consignment, etc.) or when the seller assumes the shipment of the products to the purchaser.

The Carta Porte supplement will also be added to CFDI of Transfers when the shipping of the goods is made by an intermediary or by an agent of transport as explained before. In such cases the current regulations provide that the CFDI should have zero as a value of the products and the RFC key to be used is the generic key established for transactions carried out with the public. In the field for description, the object of the transfer should be specified.

When the Carta Porte supplement is issued as part of the CFDI of Revenues (CFDI de Ingresos) as a result of the goods being transported by a haulage company, the haulage company should issue the CFDI of Revenues with the Carta Porte supplement. However, different to the previous case where the CFDI had a value of zero, the value to be included in the CFDI of Revenues will be the price of transportation services charged by the haulage company to the client.

It is important to mention that Carta Porte supplement does not substitute other documents necessary to prove the legitimate origin or ownership of products. Other additional documents will be required for this purpose.

Documents accompanying the Carta Porte supplement

While the Carta Porte supplement provides clear information about the transportation of goods being transferred, that document alone does not prove the lawful status of the goods being hauled. That status should be proven by whoever is providing the transportation, with the corresponding documents proving the origin of those hauled products, such as import documents, CFDI of Pagos, registrations and licenses etc.

In the case of transportation of petroleum products, the lawful status of the product will be proven with the printed representation of the supplement established for that type of products (the Complemento de Hidrocarburos y Petroliferos).

Structure of the Carta Porte supplement

According to the technical documentation released by the SAT, the information provided via the Carta Porte supplement will be conveyed via a number of fields (around 215) that will contain optional and mandatory information about the product being transported, type of packaging used, weight, quantity, insurance, the permit of transportation provided to the hauling company by the Secretary of Public transportation, plate and registration of the motor vehicle used, driver, as well as information about the recipient of the products being transported within Mexico.

The information of those fields will be filled via direct input by the taxpayers or in some cases via the specific choices available in a set of catalogs established by the SAT.

Such catalogs can be grouped as follows:

Catalog of transport: Contains the keys for choosing the means of transport used to move the goods (01 transport by land, 02 Maritime transport, etc.)

Catalog of station: Describes the place from where merchandise was shipped

Catalog of waterways ports, airports and train stations: Lists all the ports, airports and stations across Mexico

Catalog of units of measurements and packaging: Informs the choices about the type of container and the measurements related to the goods being transported.

Catalog of products and services: Indicates the different codes used to identify the products being transported.

Catalog of dangerous materials: Lists the options to describe and identify the products considered dangerous, when they are being transported.

Other catalogs included in this supplement are those related to the type of transport and trailers used to transfer the products by land, packaging, the types of permits, the municipalities, neighborhoods, and locations, among others.

Penalties and sanctions

Once the use of the Carta Porte supplement becomes mandatory, noncompliance with this requirement will have several immediate consequences for the violators.

Additional clarifications about the scope of the Carta Porte supplement:

When the SAT released the new Miscellaneous Fiscal Resolution for 2021 there were several doubts about the scope of this mandate. This was because for the case of land transportation, the rule established that the use of the supplement would be required only when the goods were transported via federal roads. That original release of the Miscellaneous Fiscal Resolution also established compliance with this mandate would be required to owners of national goods that are part of their assets when they haul those assets in Mexico.

To remove those misunderstandings and limitations, the SAT has recently released a new modification specifying that the mandate will be required for all movement of goods, regardless of the road used. The new resolution also excluded the reference to “national goods that are part of their assets”, so that it is clear now that it applies to any goods being transferred, regardless of its origin.

Take Action

Contact us to discuss your LATAM VAT compliance needs. Keep up to date with the changing VAT compliance landscape by downloading VAT Trends: Toward Continuous Transaction Controls.

The Colombian electronic invoicing system is reaching maturity level. Since its inception in 2018, Colombia has been steadily consolidating and expanding the mandate to make it more stable, reliable and comprehensive.

As a result of the enactment of the recent Resolution 000013/2021, the Colombian tax administration (DIAN), officially expanded the electronic invoicing mandate to also include payroll transactions. This expansion follows the pattern established by Mexico, Brazil and other countries that already expanded the electronic invoicing mandate to payroll transactions as well.

The Support Document for Electronic Payroll is known locally in Colombia as Documento Soporte de Nomina Electronica or also simply as Nomina Electronica. It is a new digital document intended to support and validate the payroll related costs and deductions of income tax and the VAT credits (if applicable) when businesses make payments resulting from labor, legal, and other similar types of relations (pensions).

In simple terms, labour cost transactions should be reported under this new digital system for them to be valid. This is whenever employers make payments for wages, salaries, reimbursements, pensions etc.

Who is required to comply with the electronic payroll mandate?

Employers paying wages under a labor relation, where payments are reported as expenses for income tax purposes or as deductible taxes for VAT, need to comply. However, there are important exceptions derived from that legal framework. For instance, public offices, non-for-profit entities or taxpayers under the simplified regime are not currently required to comply. Consequently, they do not need to use such payments for deductions of income tax or VAT.

Schedule of deployment

The DIAN established an implementation schedule based on the number of employees the taxpayer has in the payroll. There are four stages or groups subject to the following deadlines:

Group Deadline to start the generation and remittance of the document Number of employees
From Up to
1 1 September 2021 More than 250 employees101
2 1 October 2021 101 250
3 1 November 2021 11 100
4 1 December 2021 1 10

Deadline for remittance

As the Nomina Electronica is required to be reported monthly, the payments for each month should be reported by the 10th day of the next month as a result. The adjustment notes should be reported within the same deadline, once they have been made by the employer.

Reporting elements of the electronic payroll mandate

There are two basic types of reports that are parts of this mandate: the Support Document of the electronic payroll, and – when necessary – the Adjustment Note.

Support Document of Electronic Payroll or Nomina Electronica

This electronic document contains the information supporting the payments made to employees as wages and other compensations, deductions and the difference between them made by the employer, as reported in the payroll. The employer must then generate and transmit the document to the DIAN using the XML format established in the technical documentation included in the regulation 000037/2021.

Adjustment Notes

In this mandate there are no credit notes as we know them in the electronic invoice system of Colombia. However, when an employer needs to make corrections to the Support Document of Electronic Payroll reported to the DIAN, it can issue what we know as Adjustment Notes (or Notas de Ajuste) where the employer will be allowed to correct any value previously reported to the DIAN via the Nomina Electronica.

Content and structure of the reports

Employers must submit reports to the DIAN individualised for each beneficiary receiving payments from the employers. As a result, the report requires the provision of some mandatory information for the DIAN to validate. This includes the proper identification of the report itself, the reporting party, in addition to the employees, wages or other payments employees, date, numbering, software etc.

Another mandatory information element that is worth mentioning is the CUNE or Unique Code of Electronic Payroll Support Document. This is a unique identifier for each Electronic Payroll Support Document. It will allow exact identification of each report or the Adjustment Notes issued after it. However, there is some additional optional information that can be provided depending on the needs or convenience of the employer making the report.

From a technical perspective, neither the Support Document of the Electronic Payroll nor the Adjustment Notes are based on the UBL 2.1 structure used in Colombia for the electronic invoice. This is because the UBL standard does not include modules for payroll transactions or reports. Therefore, the DIAN has based its architecture in a different XML standard. Each report requires a digital signature. For that, the taxpayer can use the same digital certificate used for signing electronic invoices.

Generation, transmission and validation

The current regulations do not require that the Nomina Electronica or the Adjustment Notes should be generated by a particular software solution or by a software provider authorized by the DIAN. Taxpayers have the option to generate the report using their own solution. That is a market solution or a solution that the DIAN will provide for small taxpayers. However, all reports should strictly follow the technical documentation issued by the DIAN within the Resolution 000037/2021. The remittance of those documents is electronic, using the webservices specified by the DIAN.

After making the transmission, the DIAN then validates the document. They will then report back the corresponding application response to the taxpayer, indicating its acceptance and validation. Only then, will the amounts reported in the payroll document are valid expenses for the deduction.

Penalties and sanctions

Non-compliance with electronic payroll in Colombia will be subject to the same fines and penalties established for not complying with the electronic invoicing mandate, as defined in Art. 652-1 of the Tax Code of Colombia (Estatuto Tributario). But the most important implication of non-compliance is that any payment not reported by the employer, will not be allowed as expenses for income tax or VAT purposes when applicable.

Take Action

Speak to our experts about your tax requirements in Colombia and keep up to date with the changing VAT compliance landscape by downloading VAT Trends: Toward Continuous Transaction Controls.

As managing director, Latin American development, Virginia Costa believes that the key to building motivated teams comes from a clarity of common purpose. This is the way to unleash the full potential of talented teams, build great products and solutions and complete our company mission.

Virginia has successfully led multiple integration processes, overseeing the creation and growth of development teams. She empowers her teams to set high standards built on a strong foundation of integrity.

Her Leadership philosophy is to continuously foster open and honest communication, creating an environment of trust and transparency, mutual respect and diversity.

When she is not working towards our company vision, Virginia enjoys playing tennis and spending time with her family.

Virginia credits her ability to relate to people in different jobs and situations with her well-rounded educational background and many years managing complex projects that required her to look at problems from different angles.

For more, see Virginia’s LinkedIn profile.