The traditional paper invoice is going the way of the dinosaur in Colombia. The Colombian tax authority DIAN (Dirección de Impuestos y Aduanas Nacionales, or Directorate of National Taxes and Customs) has issued new regulations that will make electronic billing mandatory for most businesses over the next year.
If you run a business in Colombia, big changes are coming your way when it comes to how you issue invoices and receipts. To help you understand what’s happening and how to prepare, here’s a breakdown of the new electronic billing resolution and what it means for Colombian companies.
What is DIAN?
DIAN is the Colombian government entity responsible for administering and enforcing tax, customs and foreign trade operations in the country. It’s akin to the IRS in the United States or HMRC in the United Kingdom.
One of DIAN’s main roles is regulating business invoicing and receipts. The move towards mandatory electronic billing allows DIAN to have real-time visibility into business transactions for tax compliance and revenue collection purposes.
Summary of the Electronic Billing Resolution
On January 31, 2024, DIAN issued Resolution 000008, which modifies and provides updated implementation timelines for the adoption of electronic invoicing and receipts mandated under the previous Resolution 000165 from November 2023.
The key points of the new resolution are:
- It establishes staggered deadlines between May-November 2024 for various businesses and document types to implement electronic invoicing.
- Large taxpayers and electronic invoice issuers must adopt electronic POS receipts by May 1, 2024.
- Other income tax filers have until June 1, 2024 to implement electronic POS receipts.
- Non-income tax filers and other taxpayers have until July 1, 2024.
- Several other document types like transportation tickets, receipts, and venue tickets have deadlines ranging from August-November 2024 to go electronic.
- Businesses must adopt the updated Technical Annex 1.9 for electronic invoicing by May 1, 2024.
The resolution aims to provide more time for the complex process of transitioning to a fully electronic billing system across Colombia, based on feedback from business groups.
Impact on Businesses
Virtually every business that issues receipts or invoices of any kind in Colombia will be impacted by this resolution in the coming months. From large corporations to small mom-and-pop shops, everyone will need to go digital with their billing processes.
Businesses that don’t implement electronic invoicing by their mandated deadline could face penalties from DIAN for non-compliance. While specifics haven’t been outlined yet, fines and other sanctions are likely for violators.
The move to electronic billing will require companies to invest in new software, hardware like POS systems, employee training and revised business processes. There will certainly be upfront costs in both money and time to meet the requirements.
However, DIAN argues that the long-term benefits include efficiency improvements, better data visibility for tax calculations, faster tax refunds, and reduced use of paper. Many businesses may see return on their investment over time through streamlined operations.
Why the Change to Electronic Billing?
According to DIAN, mandating electronic invoicing will provide significant improvements in suggested tax return filings, automatic tax refund processes, and real-time access to transaction records for goods and services.
At its core, the move to electronic billing gives DIAN unprecedented visibility into the transaction details of businesses operating in Colombia. This allows the tax authority to verify revenues, expenses, and tax calculations with much more accuracy and efficiency than relying on paper documentation.
In DIAN’s press release announcing the resolution, Cecilia Rico Torres, the Director of Tax Management, highlighted the benefits of having real-time insight into sales receipts and purchase records submitted electronically.
While greater tax compliance and revenues are certainly a big driver for the Colombian government, DIAN also cites environmental benefits by reducing the use of paper invoices and receipts nationwide.
The resolution modifies Article 23 and partially the paragraph of Article 62 of Resolution 000165 of 2023. The changes are primarily focused on the implementation schedule for the electronic equivalent document and adjustment notes. Specific dates have been set for different taxpayer groups and various types of electronic documents.
Implementation Schedule:
Electronic equivalent document for POS systems:
- May 1, 2024: Large taxpayers.
- June 1, 2024: Income tax declarants who are not large taxpayers.
- July 1, 2024: Non-income tax declarants and other taxpayers.
- Other electronic documents:
- Public utility services: August 1, 2024.
- Passenger transport ticket: August 1, 2024.
- Bank statement: August 1, 2024.
- Air transport ticket: September 1, 2024.
- Lottery tickets: September 1, 2024.
- Toll receipts: October 1, 2024.
- Stock exchange operation receipts: October 1, 2024.
- Commodity market operation receipts: October 1, 2024.
- Public performance tickets: November 1, 2024.
- Cinema tickets: November 1, 2024.
Which businesses will be effected
In Colombia, the Dirección de Impuestos y Aduanas Nacionales (DIAN) has established various regulations and criteria for businesses that are required to use electronic billing (facturación electrónica). While the specific resolution you provided modifies implementation dates and details, it does not specify which businesses are required to adopt electronic billing. However, the general requirements for electronic billing in Colombia typically include:
Large Taxpayers (Grandes Contribuyentes): Businesses classified as large taxpayers by DIAN must use electronic billing.
- VAT (IVA) and National Consumption Tax (Impuesto Nacional al Consumo) Payers: Businesses that are required to pay VAT or national consumption tax must issue electronic invoices.
- Registered Invoicers (Facturadores Obligados): Businesses that issue invoices and are registered with DIAN as obligated invoicers.
- Service Providers and Goods Sellers: Any business that provides services or sells goods and meets the criteria set by DIAN.
Businesses in Specific Sectors: Certain sectors may be mandated to use electronic billing regardless of size or revenue, based on DIAN’s directives.
The specific criteria and categories can be detailed in various resolutions and decrees issued by DIAN. The adoption and implementation timelines are often outlined in these documents to ensure compliance across different business segments.
DIAN has issued specific guidelines and resolutions detailing the sectors and types of businesses required to use electronic billing. The requirements can vary based on the regulations in effect at the time. As of the latest updates, the following sectors and types of businesses are generally required to implement electronic billing in Colombia:
Large Taxpayers (Grandes Contribuyentes): Companies classified as large taxpayers by DIAN.
- VAT (IVA) and National Consumption Tax Payers: Any business required to pay VAT or the national consumption tax.
- Public Utility Services: Companies providing public utilities.
- Transportation Services: Including tickets for passenger transportation and air travel.
- Entertainment and Event Services: Such as ticket sales for public performances, concerts, cinemas, and other entertainment events.
- Gaming and Lottery: Companies involved in gaming, lottery, and other similar activities.
- Healthcare Services: Medical service providers and related healthcare services.
- Educational Services: Educational institutions providing formal education.
Complying with the Resolution
If you run a business of any size in Colombia, you need to start preparing now for the electronic invoicing mandate. Depending on your operation, implementation could be a major undertaking involving new technology, processes and training.
Here are some key steps to ensure compliance:
- Identify your deadline based on business type – Find out which implementation group you fall into (large taxpayer, income tax filer, non-filer, etc.) to know your target date.
- Evaluate existing systems – Take an inventory of your current invoicing, receipting, accounting, and transaction recording processes and technology. What needs to change?
- Initiate implementation planning – Don’t wait until the last minute. Develop a robust plan for system changes/additions, employee training, testing, and going live with electronic billing.
- Secure budget and resources – Electronic billing may require investment in areas like software, POS hardware upgrades, IT support and training. Nail down budgets and identify resources.
- Engage vendors and service providers – You may need to work with technology vendors, payment processors and other suppliers to ensure integration across your systems.
- Test thoroughly – Don’t risk non-compliance. Perform extensive user testing on your electronic billing solution before the deadline to work out any kinks.
- Communicate widely – Electronic billing impacts many fronts, so communicate early and often with employees, customers, partners and suppliers about the changes.
The consequences of not meeting DIAN’s electronic billing mandates likely include fines, penalties, temporary or permanent closure of the business, audits and other compliance headaches. Getting ahead of the requirements is critical.
While the transition may seem daunting, the long-term benefits of electronic billing include tighter financial controls, streamlined recordkeeping, better tax management and positioning your business for real-time digital transactions.
The paper invoice era is ending in Colombia. Make sure your business is ready for the all-digital future of billing and invoicing. Proper planning and implementation today will pay operational dividends for years to come.
If you have any questions regarding the DIAN Electronic Invoicing and Taxes you can contact Ana from Asesorias HG , Ana is an expert in Business Accounting services.
