In Latin America, one of the most frequent errors made when approaching electronic invoicing is assuming that the procedure is comparable to that of the European Union. Simply put, Latin American electronic invoicing is not the same as EU electronic invoicing. In this analysis, we emphasise the top five distinctions between EU nations and those of Latin America, particularly Brazil, Mexico, and Argentina.
Key learnings: Latin America einvoicing will have an impact on how your SAP ERP system is set up, how well you can export your goods, and how closely you pay attention to the ever-changing regulations.
1. An invoice is required in many Latin American nations – Yes, we are seeing governments demand electronic invoices in several EU countries. But only Business to Government (B2G) interactions fall under this. The majority of EU nations do not mandate that you transmit an authorised electronic invoice for Business to Business or Business to Consumer transactions. Instead, if you decide to submit an invoice electronically, the EU defines functional requirements. The theme of these useful Lego blocks is “authenticity and integrity.” If your firm meets specific requirements, Latin American nations like Mexico may compel you to send an electronic invoice that has been recognised by the government. For instance, the recently issued regulation by Mexcio’s Servicio de Aministracion Tributaria (SAT) mandates the sending of electronic invoices by businesses with yearly turnover of more than 2 million pesos.
2. A real-time, completely integrated process is necessary in Latin America – In nations like Brazil, this goes beyond simply digitally signing a PDF and transmitting it to the consumer via a portal while also keeping a copy in a long-term archive. It can take 20 to 30 seconds for these highly developed, real-time interfaces with the government to get approved. We will go into greater detail about the processes in Latin America in subsequent blogs, but some of the most common components are: a defined XML schema via Web Services, a sequencing process, a printing process that specifies an output that must be delivered with the truck, designated barcodes on the printouts, archiving, and more.
3. The electronic invoice approval is tied to your logistics process in nations like Brazil and Mexico, which means you can’t send your product from your warehouse until you get the government’s approval on your invoice. Beyond only your ability to ship, this can actually take many different forms. If the invoice information doesn’t match what is on the truck or what is delivered to your customer, the worst-case scenario is that the government can seize your truck, the tangible products, and impose very harsh financial penalties. For instance, in Brazil, the truck’s DANFE must be printed with all the fiscal information and approval information. Additionally, for this reason, you should always have a well defined contingency procedure in place as well as real-time, local language support from your provider.
4. Strict process standards are defined in Latin America. For example, Nota Fiscal Eletronica 2.0 in Brazil and CFD v3.2 in Mexico both fully describe the XML format, integration contact points, process, archiving, and printing procedures. The majority of EU legislation will specify what makes an invoice VAT compliant, however unlike Brazil or Mexico, they do not specify a particular format. Additionally, Latin American nations frequently go beyond these process norms, so be ready to modify the XML and procedure during the year.
5. Latin America einvoicing will effect your SAP ERP configuration – Before you can even send an electronic invoice, the solutions need to comply in Brazil, Argentina, and Mexico require configurations and frequently particular localizations to the ERP system. In Brazil, enterprises must make sure that they have appropriately installed and localised the taxes and fiscal information (which, by the way, is no simple task), as well as that they are in compliance with the reporting criteria of SPED, Sistema Pblico de Escrituraço Digital.
These are merely the main distinctions between Latin American and European Union electronic invoicing. In the upcoming months, keep an eye out for more thorough summaries.