In November, Chile will introduce the first of its electronic mandates for all tax documents: Documentos Tributarios Electrónicos (DTE). It applies to businesses billing in excess of 100,000 Unidad de Fomento (UF), or approximately $4.2m. Having scrutinised the requirements we're inclined to label the Chilean approach as the most bureaucratic of all the Latin American e-Invoicing mandates.
In Chile, similar to Brazil and Mexico, the Chilean tax authority, the Servicio de Impuestos (SII), must receive all invoices from the supplier via its accredited e-Invoicing service provider before moving them onto the buyer. Unlike Mexico, where the authorities keep a black list of suppliers that don’t meet their fiscal obligations, the Chilean SII keeps a white list of trusted suppliers.
Having received and validated the invoice, the SII returns it to the service provider who sends the buyer the XML file for upload into its ERP system. This process, while complex and challenging, is also seen in other Latin American countries. So what’s different and difficult about Chile?
It starts with folio management. The SII will allocate a range of folio numbers to be used for a specific DTE. There can be up to 10 folio ranges per company, with the particular range allocated from a portal managed by the SII. Although responsibility lies with the supplier to obtain the correct folio ranges, the service provider has to negotiate this added complexity to provide a compliant solution.
The next complication begins once the buyer receives the invoice because it must send a note to the supplier in two parts: 1) acknowledgment and 2) approved. At first glance this seems similar to the Invoice Status Service already embedded in Tungsten Network that gives suppliers visibility of the progress of their invoices towards payment. The catch with the Chilean approach is that both of these messages must be digitally signed.
The real bureaucracy starts with supplier onboarding and the way that authorities are involved in this part of the e-Invoicing process. Although a number of countries around the world require businesses to give their tax authorities advance notification that they intend to use electronic invoicing, Chile’s administrative rigidity is on another level, with a 22-step (yes, 22!) accreditation process. This means that service providers must invest in training to ensure that their teams are properly equipped to handle this new enrolment process and provide suppliers with the best support possible.
While this post only provides a high-level overview of the e-Invoicing mandate in Chile, we hope it demonstrates the complexity of the process, in particular around supplier onboarding, folio numbers and digitally signed notifications. We’d need a much longer post to cover everything involved, but we can tell you that Chile provides a fresh challenge in the ever-evolving job of managing compliance for a global e-Invoicing network!