The much anticipated news from Colombia has arrived. On November 24, 2015, the Colombia DIAN (tax authority) announced in Decree 2242 that electronic invoicing will be mandated for specified companies starting January 2016. Similar to mandates already in place in Mexico and Chile, for example, this is a way for Colombia to combat tax evasion (read our previous blog for more information), with the goal of reducing tax evasion from 22% to zero by companies conducting business in Colombia.
During the initial phase, 30 of the largest companies, primarily in the consumer products industry, will start the pilot phase on January 1, 2016 and will be mandated to go live within six months. After that, the next round of companies will be mandated by the DIAN to implement electronic invoicing within a six month deadline.
Colombia is following the trend of other countries (Chile and Peru, for example), and is in the process of defining a “catalog of particpants” that will be designated based on a number of factors including in-country revenue, invoice volume and sector. What does this mean to you? If you are a multinational, you should start preparing now for the inevitable rollout in 2016.
Below are some high level highlights taken from Decree 2242:
- Standard format: The DIAN will utilize an XML standard, details of which will be finalized in the next few months
- Signature: Electronic Invoices must have a digital signature to authenticate the integrity of the invoice
- Certification Process: The DIAN will create a testing environemnt for the adoption of electronic invoicing
- Accounts Receivables: Receivables must be approved by the DIAN before sending an invoice
- Accounts Payables: When receiving an invoice, it must be validated and the status of the invoice must be communicated to the supplier
- Validation: There is a 48-hour window to send electronic invoices to the DIAN. In the event that the invoice has an issue, corrections must be made within 48 hours
- Reports: Auxilary “Libros” reports will be required for sales and purchases
The DIAN is expected to release technical specifications in the first quarter of 2016.
Colombia’s recent announcement makes it the eighth country within Latin America to mandate new tax and electronic invoicing policies. These mandates divert funding and staff away from strategic initiatives while exposing multinationals to constant unbudgeted costs, severe financial penalties, operational shut downs, and impounded shipments.