The Dominican Republic is advancing its tax processes through the implementation of mandatory electronic invoicing, known as Comprobante Fiscal Electrónico (e-CF). This system digitizes the documentation of goods and services transactions, enhancing efficiency and compliance.
Understanding e-CF
An e-CF is a digitally signed electronic document that certifies the transfer of goods, delivery in use, or the rendering of services. It holds the same legal validity as traditional paper invoices and must adhere to the standards set by the Dirección General de Impuestos Internos (DGII). Only taxpayers authorized by the DGII can issue e-CFs.
Structure of e-CF
The e-CF is structured as an XML document, which allows for a standardized format that can be easily processed by various software systems. XML facilitates the inclusion of complex data types and hierarchical relationships, making it suitable for tax-related information.
To distinguish e-CFs from traditional paper invoices, they follow a specific identification format. “E” indicates the series, the next 2 digits specify the type of voucher and the last 10 digits correspond to the sequential, for a total of 13 characters.
Types of e-CF
All e-CFs must have an electronic tax receipt number (e-NCF), authorized by the DGII, which consists of an alphanumeric sequence. The e-CF system includes various document types to cater to different transaction needs:
31 — Fiscal Credit Invoice: For transactions supporting tax credits.
32 — Consumer Invoice: For sales to final consumers.
33 — Debit Note: To reflect additional charges like interest or freight.
34 — Credit Note: For refunds, discounts, or corrections.
41 — Purchase Invoice: For purchases from unregistered individuals.
43 — Minor Expenses Invoice: To document small employee expenses related to business operations.
44 — Special Regimes Invoice: For transactions under special tax regimes.
45 — Government Invoice: For sales to government entities.
46 — Export Invoice: For export transactions.
47 — Foreign Payments Invoice: For payments made abroad.
Benefits of e-CF
Adopting the e-CF system offers several advantages:
Cost Reduction: Lowers expenses related to paper, printing, and storage.
Environmental Impact: Decreases paper consumption, contributing to environmental conservation.
Increased Efficiency: Automates processes, reducing errors and speeding up transactions.
Enhanced Security and Traceability: Digital signatures ensure document authenticity and facilitate tracking.
Simplified Tax Compliance: Eases the preparation and auditing of tax returns.
Transitioning to e-CF
The three methods for issuing Electronic Tax Receipts (e-CF) in the Dominican Republic are:
Self-Developed Systems: Taxpayers may implement their own electronic invoicing systems, provided they obtain authorization from the Dirección General de Impuestos Internos (DGII) and comply with established e-CF issuance and receipt requirements.
Electronic Invoicing Service Providers: Taxpayers can utilize systems from DGII-certified service providers that adhere to current regulations.
Free Invoicing Software: The DGII offers complimentary invoicing software designed for computers with internet access. This tool is especially beneficial for self-employed individuals, sole proprietors, and small to medium-sized businesses lacking proprietary invoicing systems.
These options provide flexibility for taxpayers to choose a method that best fits their operational needs while ensuring compliance with electronic invoicing mandates.
Requirements for Using e-CF
To utilize the e-CF system, taxpayers must meet the following criteria:
RNC Registration: Be registered in the National Taxpayer Registry.
Tax Obligations: Be current with all tax responsibilities.
Digital Certificate: Obtain certification for secure digital signatures from INDOTEL-accredited entities.
Technical Specifications: Comply with DGII’s technical requirements.
Authorization Process: Complete the necessary applications and certification processes with the DGII.
Implementation Timeline
The Dominican Republic’s journey towards electronic invoicing began with a pilot program initiated by the General Directorate of Internal Taxes (DGII) in 2019. This pilot involved 11 major companies and aimed to assess the feasibility and effectiveness of electronic invoicing in enhancing tax compliance and operational efficiency. The pilot ran from February 1 to December 31, 2019, which demonstrated significant success and paved the way for broader implementation.
Following the pilot’s success, the Dominican Republic established a legal framework for electronic invoicing. The General Law on Electronic Invoicing (Law 32–23) was enacted on May 16, 2023, mandating the use of electronic invoices (referred to as Electronic Fiscal Receipts or e-CF) across various sectors. This law aims to modernize invoicing processes, reduce tax evasion, and improve tax control through automation.
The implementation of electronic invoicing is structured in phases based on the size of companies:
Large national taxpayers: they have a period of 12 months after enactment of the electronic invoicing law. These large taxpayers have been divided into three groups. The first group has a deadline of 15 January 2024. The second group has until 15 March 2024 to set up their electronic receipts. The third group has a period lasting until 15 May 2024.
Large local taxpayers and medium-sized national taxpayers: they have a period of 24 months after enactment of the electronic invoicing law. This means that these companies must become electronic taxpayers before 15 May 2025.
Small, micro and unclassified enterprises: they have a period of 36 months after enactment of the electronic invoicing law. The margin for SMEs is 3 years, wherefore the deadline for these types of enterprises is 15 May 2026.
This phased approach allows businesses to transition smoothly and ensures adequate preparation time.
Conclusion
The e-CF system represents a significant advancement in the Dominican Republic’s tax administration, promoting digitalization and efficiency. By complying with the DGII’s requirements and utilizing available tools, businesses can seamlessly integrate into this modernized framework, reaping benefits such as cost savings and improved compliance.
Let the experts at Melasoft guide you when it comes to electronic invoicing in the Dominican Republic. Feel free to contact us for a solution.
For more detailed information, visit the DGII official website.
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