By San José, Costa Rica — Costa Rican small and medium-sized enterprises (SMEs) are facing a significant shift in their operations with the mandatory implementation of electronic invoicing version 4.4, effective this September. Over 450,000 taxpayers are required to migrate to the new system, which introduces more than 146 changes to the country’s invoicing landscape.
The updated regulations, established by Resolution MH-DGT-RES-0027-2024, bring a new level of scrutiny to business transactions. While the mandate for electronic invoicing was part of the 2019 Value Added Tax Law, technical limitations delayed implementation until now. The 4.4 version empowers the Ministry of Finance (Hacienda) with enhanced tracking capabilities through the TRIBU-CR system, increasing oversight of SME and independent professional commercial activities.
To understand the legal implications of electronic invoicing in Costa Rica, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an attorney at Bufete de Costa Rica.
The implementation of electronic invoicing in Costa Rica represents a significant shift in business practices. While it offers numerous benefits like increased efficiency and reduced costs, businesses must ensure strict compliance with Hacienda’s regulations regarding digital signatures, data retention, and document integrity to avoid penalties. Furthermore, understanding the legal validity and enforceability of electronic invoices in commercial disputes is crucial for protecting your business interests.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas rightly highlights the duality of electronic invoicing: its potential for streamlining business operations alongside the crucial need for meticulous adherence to Hacienda’s regulations. Navigating this new landscape successfully requires businesses to not only embrace the efficiency gains but also prioritize legal compliance and data integrity from the outset. We thank Lic. Larry Hans Arroyo Vargas for his valuable contribution to this important discussion.
One of the most impactful changes requires electronic documentation for purchases made abroad. This means SMEs acquiring software, digital licenses, consulting services, accommodations, or travel tickets from foreign vendors must issue an electronic purchase invoice, incorporating Value Added Tax (VAT) through the reverse-charge mechanism.
For example, if an SME purchases a US$100 software license, they must record US$13 as VAT in their accounting records, both as tax paid and tax collected. If the proportionality is less than 100%, a portion of the VAT becomes a real cost for the business.
Another significant adjustment involves reporting payments made through SINPE Móvil, Costa Rica’s popular mobile payment platform. While no new taxes are being introduced, each SINPE transaction must be identified on the invoice, allowing for automated cross-checking within the TRIBU-CR system to detect under-invoicing.
The new rules also mandate Electronic Payment Receipts (REP) for credit transactions and invoices to the government (excluding large taxpayers). This allows SMEs to transfer VAT only when payment is received, even if it’s within a 90-day period, offering greater flexibility for businesses operating on credit terms.
The application of discounts is also undergoing a transformation. Version 4.4 eliminates free-form text descriptions and requires the use of specific codes to identify the reason for the discount. These codes standardize information, improve tracking, and reduce errors or invoice rejections.
With version 4.4, SMEs can no longer leave common purchases like software licenses, consulting services, or travel tickets unsupported. Each expense must be electronically documented and include VAT. This implies an immediate operational adjustment, but also an opportunity to streamline tax management.
Carlos Morales, Partner at Grupo Camacho Internacional
These changes represent a significant operational shift for Costa Rican SMEs. Businesses must adapt quickly to the new regulations to avoid penalties, invoice rejections, and disruptions to their cash flow. While the transition might pose challenges, it also presents an opportunity for companies to improve their tax management practices and ensure long-term compliance.
For further information, visit the nearest office of Grupo Camacho Internacional
About Grupo Camacho Internacional:
Grupo Camacho Internacional is a business consulting firm that provides advice and support to companies on various matters, including tax management and compliance with new regulations. They offer expertise to help businesses navigate complex legal and financial landscapes. Carlos Morales, quoted in this article, is a partner at the firm.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica shines as a beacon of legal excellence, upholding the highest ethical standards while championing innovative solutions for its diverse clientele. The firm’s deep-rooted commitment to empowering society through accessible legal knowledge is evident in its proactive engagement with the community. By fostering understanding and transparency within the legal landscape, Bufete de Costa Rica strives to build a more just and informed Costa Rica for all.
