In recent years it has been seen that the implementation of electronic invoicing has advanced by impressive leaps in Latin America. Chile, Brazil and Mexico are usually mentioned as success stories and worldwide examples in their implementation. But currently in Latin America, there are many other countries with relevant advances. These include Uruguay, Argentina, Paraguay, Peru, Ecuador, Colombia, Panama, Costa Rica, Guatemala and the Dominican Republic. All with varying degrees of progress and characteristics, but generally progressing in the right direction.

The implementation of electronic invoicing has many benefits. For the tax administration, if adequate control is carried out, tax evasion is reduced. For taxpayers, it reduces the operating costs. 

In my opinion, a relevant issue that a tax administration must consider to implement a successful electronic invoice project is to evaluate the feasibility that all transactions carried out by taxpayers with tax effects are carried out observing the same logic as an electronic invoice. In other words, in general terms, with electronic documents that are sent to the tax administration for accounting and registration.

If the above is implemented successfully, the relationship between the tax administration and the taxpayer can and should be transformed from one based on the communication and control of records and declarations to one based on the communication and control of transactions. In this scenario, the declarations for the payment of taxes can and should be a proposal by the tax administration to the taxpayer.

There are multiple advantages for a tax administration and also for taxpayers in achieving this relationship between the two based on transactions. Thus, for the tax administration, the benefit is that it to no longer has to inspect records and declarations, but to directly review transactions and, as a result, to be able to have a verification in real time, much more efficient, effective and massive, with the effect of reducing tax evasion of all taxes. On the other hand, for taxpayers who seek to comply with their tax obligations, the costs related to the delivery of information from registries and declarations are reduced, but also the costs resulting from facing an eventual inspection of said registries and declarations, in which many periods and/or years are controlled, with an uncertain result, which potentially can have tremendous negative effects on the company’s financial results.

In my opinion, this should be the main objective of a tax administration that seeks to make appropriate use of the advances in the world of digital technology to reduce tax evasion and facilitate taxpayers’ compliance.

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