How electronic invoicing works in Costa Rica
The implementation of electronic invoicing in Costa Rica was initiated in 2017 by the General Directorate of Taxation - DGT of Costa Rica through a gradual program of adoption by sectors and activities of taxpayers that ended in 2018. Since then, electronic invoicing is mandatory for all taxpayers both in issuance and reception.
Electronic Invoice Updates - Version 4.3
The Ministry of Finance (Ministerio de Hacienda) has made modifications in the General Resolution on Technical Provisions of Electronic Documents for tax purposes. These modifications, which will come into effect starting September 12, 2023, focus on four key points:
- The field "Credit Sale subject to VAT up to 90 days (Article 27, VAT)", or “"Venta a crédito) with code 10 has been added, along with its corresponding explanatory note, to note 5 of the sales condition.
- The field "Payment of credit sale subject to VAT up to 90 days (Article 27, VAT)", or "Pago de venta”, with code 11 has been incorporated, accompanied by its respective explanatory footnotes, in note 5 of the sales condition.
- The "Reduced Rate 0.5%" field with code 09 has been introduced in note 8.1 of the Value Added Tax (IVA) tax rate.
- The name of the "Exemption Percentage", or "Porcentaje de la Exoneración” field has been changed to "Exempt Rate,", or "Tarifa exonerada" and the field type has been adjusted to "Decimal" with a size of 4.2 characters.
Table of Contents [Hide]
- How the electronic invoicing system in Costa Rica works
- Requirements for being an electronic invoice issuer in Costa Rica
- Electronic Documents
- Types of electronic documents
- Format of electronic documents
- Catalog of goods and services (CAByS)
- Automate the issuance and reception of electronic invoices with any trading partner
- Benefits of electronic invoicing in Costa Rica
How the electronic invoicing system in Costa Rica works
In the case of Costa Rica, electronic invoicing is carried out through the Ministry of Finance, which receives, validates, and issues a receipt of the invoice to the final recipient. Electronic invoices are called electronic documents.
All electronic documents and associated documents must have the acceptance message from the Ministry of Finance; otherwise, they cannot be used as a means of supporting tax credits or as deductible expenses.
The flow works as follows:
- The taxpayer sends an XML to the Ministry of Finance of an invoice for validation and receipt of the Hacienda Message.
- The Ministry of Finance receives the invoice and has up to 3 hours to validate and send a receipt of acceptance or rejection. This message will accompany the invoice sent to the recipient.
- The recipient must accept or reject the invoice with a new message.
In the electronic invoicing flow of Costa Rica, there are two key messages that will travel along with the electronic documents.
- Hacienda Message: A message that the Ministry of Finance gives in response to the electronic invoice issuer indicating the Approval or Rejection of it. The validations by the Ministry of Finance will be at the structural level in addition to semantic validations (amounts, addresses, etc.).
- Recipient Message: A message that the recipient of the electronic invoice sends to the Ministry of Finance accepting, partially accepting, or rejecting it.
Confirmation or rejection by the receivers "must be sent to the General Directorate of Taxation for respective validation within the first 8 business days of the following month to the transaction or respective operation. In case of rejection, a new confirmation message must be sent," as determined by resolution DGT-R-063-2018.
All electronic receipts and associated documents must have a message of acceptance from the Ministry of Finance; otherwise, they cannot be used as support for tax credits or deductible expenses.
Requirements to be an electronic invoicing provider in Costa Rica
To be able to issue electronic receipts, the taxpayer must register with the DGT and have a security mechanism to sign the electronic receipts and ensure their integrity and authenticity. For this, it is necessary:
- Electronic signature to guarantee integrity and authenticity. The invoice must be digitally signed from a certificate issued by an international certification authority.
- Storage is mandatory for the issuer and recipient for a period of five years.
Electronic receipts are those tax documents that are generated, expressed, and transmitted at the time of selling goods or services.
Types of Electronic Receipts
The electronic invoice in Costa Rica comprises a total of five documents or messages that are part of the exchange:
- Invoice: Supports the sale of goods and the provision of services.
- General electronic invoice: an electronic receipt that details sales in a global invoice whose sender is a generic tax ID that serves to declare the corresponding income before the Ministry of Finance in case the taxpayer does not request their electronic invoice.
- Export electronic invoice: an electronic receipt that serves to detail the export of goods and services "abroad."
- Purchase electronic invoice: An issued electronic document that certifies the purchase of goods or services from taxpayers excluded from the use of electronic receipts. This document must be issued by the buyers of those services or goods to the Ministry of Finance for validation.
- Credit note and Debit note: Allow for the annulment or modification of the accounting effects of the electronic invoice or ticket without altering the information of the original document.
- Electronic ticket: an electronic receipt that supports the sale of goods and services, authorized only for operations with final consumers.
- Acknowledgments of acceptance or rejection of documents.
Format of Electronic Invoices:
Electronic invoices must be issued in XML format. The electronic invoice is version 4.3.
Catalog of Goods and Services (CAByS):
The Ministry of Finance and the Central Bank of Costa Rica have established a standard procedure for the classification of products and services that are marketed nationally through the creation of the Catalog of Goods and Services CAByS.
The CAByS catalog groups goods and services into hierarchical categories and assigns to each of these products the Value Added Tax (VAT) rate that corresponds according to current legislation. In this way, taxpayers must include in the electronic invoices, in the field called "Product/Service Code", the identification code for each good or service assigned in the Catalog of Goods and Services CAByS.
Automate the Issuance and Receipt of Electronic Invoices with any trading partner.
At EDICOM, we have an electronic invoicing platform adapted to the technical and legal specifications of Costa Rica.
On one hand, through integration with their management system, EDICOM can automate the generation and sending of invoices to the Ministry of Finance, also integrating the receipts received in the ERP. At the same time, the sending of invoices to recipients is also automated.
For electronic receivers who are not issuers, the Supplier Portal solution developed by EDICOM allows managing the receipt of invoices and managing the Receiving Message both to the issuer and to the Ministry of Finance.
Additionally, through the Supplier Portal, any type of documentation from electronic issuers can be received, such as the sending and receipt of purchase orders. This portal is intended for those electronic invoice receivers who do not have an integrated EDI solution.
EDICOM is a specialized technology provider in the implementation of international EDI projects. Regarding electronic invoicing, EDICOM has developed a Global e-Invoicing Platform, adapted to the technical and legal specifications of each country, and integrated into the company's management system, automating the issuance and receipt of documents, allowing for centralized management. The platform also verifies that each invoice meets the necessary requirements before sending or integrating it into the internal management system.
The Global e-Invoicing Platform simplifies the issuance and receipt processes of electronic invoices in multinational environments. It is the solution for those companies that operate in different markets from centralized management systems and that must be able to process these documents in accordance with the current legislation in each country.
Benefits of electronic invoicing in Costa Rica
In the case of Costa Rica, as in all Latin American countries, the adoption of electronic invoicing and the progressive implementation of other tax obligations through electronic means respond to the need to tackle tax fraud and improve tax control and collection processes, simplify procedures, and automate supervision processes.
The implementation of electronic invoicing brings significant benefits to both public and private entities in the following areas:
- Direct cost savings through the elimination of paper, printing, invoice delivery, and storage.
- Increased productivity of the administration department, which, thanks to the automation of this process, has more time to perform other tasks.
- Automation and integration in the invoice reception processes. The electronic origin of the document allows automatic integration into the system and therefore its accounting, leaving the invoices ready for payment with minimal human intervention.
- Greater efficiency and elimination of human errors because of automation and fully integrated treatment. Electronic invoices can be generated and transmitted automatically. In Costa Rica's model, the communication flow of the electronic invoice includes two key messages: Treasury message, Receiver message.
Therefore, most of the economic benefits are not due to savings on printed material and shipping costs, but rather to the total automation and integration of the process between the parties involved.
- Shorter delivery and invoice collection times. The efficiency of the emission and reception processes, their immediacy, and the almost complete elimination of errors in the generation and accounting of invoices contribute to reducing the payment terms of invoices.
- Increased security. Digital signature systems guarantee the integrity, origin, and authenticity of these invoices.
- Agile, secure, and legal storage. The original and signed documents are stored for at least the time established by current legislation. This reduces storage costs and also facilitates the consultation of old invoices.
- Elimination of the risk of loss of physical documents thanks to secure storage and digital consultation of invoices.
In conclusion, the implementation of electronic invoicing as a billing model brings numerous advantages to companies, which ultimately result in cost savings. Therefore, the investment in technology required to incorporate this system is very profitable.
In addition to its profitability, the adoption of electronic invoicing opens, in many cases, the door to the electronic data exchange system, EDI (Electronic Data Interchange). Companies not only assume a new billing management model but also take advantage of the digital leap to implement new communication solutions that will provide them with greater competitive advantages.