e-Invoicing in Colombia: a chronology of 20 years of history
As of 2015, e-invoicing is an increasingly relevant issue in Colombian day-to-day life, due to the massification project by the National Customs and Tax Directorate (DIAN). Nevertheless, this digital billing method is nothing new in the country. in fact, it has been regulated since 2007. Let’s look at its development and why it now takes pride of place.
To start with e-invoicing chronology in Colombia, we need to go back more than two decades. Back in 1995, Article 37 of Law 223 made it equivalent to the traditional invoice on paper as a sale document. A year later, the first exploratory pilot schemes with this technology were carried out.
Despite the early beginnings, we would need to wait until 2007 for e- invoicing to be regulated. This is when two basic standards were approved: Decree 1929 and Resolution 4465. The former defines the electronic invoice and explains how it must be issued, delivered, accepted and preserved by digital means. In turn, the resolution sets out the technical features of this system.
As of this date, e-billing was rolled out on a voluntary basis for taxpayers wishing to sign up. To do so, it is necessary to submit an application to the DIAN. But in addition, it is indispensable to obtain formal agreements with all clients and customers on this technology.
In 2014, it was estimated that only 2% of businesses were using e-invoicing. The need to forge agreements with clients, linked with the lack of a defined standard for e-documents to enable interoperability and ensure integrity, represented two obstacles to adaptation.
Taking this issue into account, in 2013 the DIAN started working on a massification project for widespread use of e-invoicing, inspired by the model used in countries such as Chile, Brazil or Mexico at the forefront of this technology. The aim was to correct the faults detected in the current system and gradually promote the obligatory nature of e-invoices among the country’s taxpayers.
In November 2015, the DIAN’s work bore fruit with the approval of Decree 2242. This regulation lays down the obligation to issue e-invoicing for natural and legal persons, as selected by the DIAN. It also provides that incorporation to this technology will take place gradually, taking into account criteria such as revenue, risk level and location, among other factors. Another important point of law is that e-invoices must use an XML format and include a digital signature in order to ensure greater security.
On 24 February 2016, Resolution 000019 was published. Through it, the DIAN determined a technical monitoring system in accordance with Decree 2242, which listed the requirements for e-invoicing. These include the standard, the digital signature format and authorization of e-invoicing issuers, among others.
A few months later, on April 18, the DIAN gave the e-invoicing pilot scheme the green light. Fifty-eight Colombian businesses took part in the project, designed to detect and rectify possible mistakes in the billing model. This phase may foreseeably be extended until next October. Then, the tax authority will select the first group of taxpayers to be required to switch to mandatory e-invoicing.
On December 29, 2017 a decree was published indicating that those companies that had requested numbering ranges during previous years for electronic invoices that were dealt with in decree 1929 of May 29, 2007 had six months to implement the electronic invoicing.
With widespread use of this technology among the country’s taxpayers, the government hopes to slash the high rates of tax evasion in Colombia. In addition, it will minimize economic costs, foster sustainability and enhance efficiency in businesses, as has occurred in countries such as Mexico or Brazil.
From EDICOM, as specialists in e-Invoicing projects, we recommend starting to plan the adaptation to the e-Invoicing model as soon as possible, as it involves modifications in the way companies work, both in-house and externally. Specialized EDICOM technicians will study each case to propose and implement the solution that best suits each business.