The Electronic Invoice in El Salvador

El Salvador continues to develop their electronic invoicing system. The Ministry of Finance has described the project as “high impact”, a key part of the Salvadoran government’s Secretariat of Innovation’s plan for 2020-2030: Agenda Digital.

On August 30, 2022, the Legislative Assembly of El Salvador approved the "Decree" updating 14 articles and introducing new articles to the Tax Code, with the primary objective of establishing a regulation on the issuance, transmission, reception, and invalidation of Electronic Tax Documents (Documentos Tributarios Electrónicos — DTE).

Some of the rules highlighted within said Decree indicate that the Tax Administration will have the power to establish the following:

•    The formal requirements that the different types of DTE must comply with: Electronic Tax Credit Vouchers, e-Invoices, Electronic Export Invoices, Electronic Remittance Notes, Electronic Credit and Debit Notes, Electronic Settlement Vouchers, Electronic Withholding Vouchers, Electronic Settlement Accounting Documents, Excluded Party e-Invoices, and Electronic Donation Vouchers.
•    The rules, form, terms, and conditions for compliance with the obligation to issue documents.
•    The instructions and technological specifications for the generation and delivery of the Electronic Tax Documents to the recipient.
•    The data structure and electronic format of the DTE, as well as the form, terms, and conditions for their transmission. […]

The guidelines for the archiving of Electronic Tax Documents (DTE) are also established:

•    Taxpayers must archive Electronic Tax Documents for a period of ten years from the date of their generation. Likewise, DTE graphic representations must be kept in the same format and medium in which they were issued. 

El Salvador e-Invoicing Update: Changes to Invoicing System Documents

The Electronic Invoicing Division of the Ministry of Finance in El Salvador has announced important updates to key documents within the Electronic Invoicing System.

• Update to the Invoicing System Catalogs v1.1: A total of eleven catalogs have been updated, covering key aspects of the electronic invoicing process. The revised catalogs are:
  CAT-009: Type of Establishment, CAT-012: Department, CAT-013: Municipality, CAT-014: Unit of Measurement, CAT-017: Form of Payment, CAT-019: Economic Activity, CAT-020: Country, CAT-027: Tax Precinct, CAT-028: Regime, CAT-030: Transportation, and CAT-031: INCOTERMS.
  Issuers of Electronic Tax Documents (ETD) using the Invoicing System platform can already implement these changes. For those using the Transmission System platform, both catalog versions will remain operational until October 31, 2024. It is recommended to update internal catalogs before this date to avoid any disruptions.

• Billing System User Manual v1.2: The User Manual has also been updated to version 1.2, specifically regarding the information required for the recipient when issuing an invoice. This modification is in response to Legislative Decree No. 960, approved on February 29, 2024, which establishes new conditions for completing the recipient's data in electronic invoices, in line with the reform of the Tax Code.
• Quick Guide to Issuing an Invoice v1.1: Finally, the Quick Guide for Issuing an Invoice on the Invoicing System platform has also been updated. The instructions have been revised to reflect the changes introduced by Legislative Decree No. 960, ensuring that issuers of electronic invoices can comply with the new requirements efficiently and accurately.

Tax Code Reform - New mandatory fields in invoices

According to the provisions of this amendment, as of March 16, 2024, additional information is required to be included in the "Receiver" section of electronic invoices of the Electronic Invoice type. Specifically, the following data must be completed:

• "Name, denomination or corporate name of the taxpayer" field.

• Fields "Type of identification document" and "Identification document number" when the amount of the transaction is equal to or greater than $25,000.00. For lower amounts, these fields are optional.
• All other fields in the "Receiver" section remain optional.

Updates to version 1.4: 

• Rounding and Slack Rules have been added.
• Excluded Party Invoice and Donation Voucher Structures are added.
• Addition of catalogues CAT-O26 & CAT-032
• Addition of Annexes 10, 11 & 12

It should be noted that taxpayers who have documents related to VAT control as of the date the Decree enters into force may continue to use them until they are exhausted or until the Tax Administration issues a resolution informing the obligation to issue DTEs.

The reform aims to modernize the Tax Administration making the transfer of information more efficient and improving controls to make them effective and transparent.

The Ministry of Finance of El Salvador has created a portal for taxpayers to check if they are required to issue electronic invoices and the corresponding date. To know if you qualify, you must enter your NIT (Tax Identification Number) in the portal.

EDICOM is now issuing electronic invoices in El Salvador

The tax authority is currently in the pilot phase with 50 large companies in different sectors. EDICOM is currently issuing invoices for one of these companies. Once the pilot phase ends it is expected for the government to announce a timeline with phases for the mandatory adoption of the electronic invoice.

El Salvador is following the path laid out by other Latin American countries like Mexico, Brazil and Chile, leaders in the transition to e-government.

The electronic invoice is an indispensable tool to stop tax evasion and optimize the tax collection process.

To prepare for the implementation of the new electronic system, personnel at the Tax Service Division of the General Directorate of Internal Taxes are being trained to provide information on the key aspects of the system.

The government has drafted a plan to strengthen the tax administration which includes the implementation of e-invoicing and establishes a user-friendly e-government linked to its plan for economic revitalization, the Plan Despegue Económico.

Among the benefits of e-invoicing mentioned by the government of El Salvador are economic and environmental cost savings from the elimination of paper use. However, it primarily emphasizes new economic opportunities such as:

• The opening of new trade channels.
• The promotion of e-commerce and new technologies.
• New business and employment opportunities providing services related to e-invoicing.

The system also improves tax collection, mainly by increasing oversight and reducing tax evasion. According to the Salvadoran Ministry of Finance, implementing e-invoicing is expected to increase revenue by 1% of GDP at the end of the current five-year period.

Electronic invoicing solutions tailored to your needs

EDICOM is an international e-Invoicing solutions provider. It offers global business-to-business data integration solutions that include a single international e-invoicing platform adapted to the technical and legal specifications of different countries.

The advantages of this solution include scalability, allowing new tools to be implemented according to the company's needs, as well as EDICOM's global capacity.