Chile’s move to this monthly VAT declaration proposal removes taxpayers’ obligation to submit the ledger of sales and purchases (libros). Instead, the SII is now preparing the Registry of Sales and Purchases, called an RCV, which records information related to all sales and purchases based on electronic invoices and documentation. With this information, the SII automatically generates a Proposal of Monthly VAT Declaration (Propuesta de IVA).
Why did Chile introduce this model?
Designed to simplify the VAT return and payment process, the Propuesta de IVA will help eliminate tax reporting errors. In 2016 alone, nearly 512,000 VAT statements in Chile contained inconsistencies. Since data is automatically completed based on original invoice information, inconsistencies between invoices, libros and VAT reports will be eradicated.
Who is required to comply?
eAssessments affect all taxpayers. Most companies in the country are already mandated to comply with Chile’s e-invoicing requirement. Chile’s final phase of e-invoicing launches in February 2018, at which time small companies must also begin complying with the regulation and will start to receive Propuesta de IVA.
How does the process work?
Chile’s ability to issue these eAssessments stems from its acuse de recibo process, requiring that all invoices be acknowledged within 8 days of issuance. The SII considers all invoices as accepted and accurate unless one of the parties rejects it within that 8-day window. Paper invoices follow the same process once they are manually added to the SII portal.
Accurate compliance is more critical than ever with eAssessments, as all credits that a taxpayer has rights to claim are determined based on these invoice approvals. If a VAT credit is owed that is not reflected accurately in an invoice that a taxpayer approves – either formally or by not rejecting it by the deadline – the SII will not consider the credit valid.
Once the Propuesta de IVA (Form 29) has been generated, taxpayers have two options:
- 1. Accept it and make the corresponding payments if any, or
- 2. Reject and make corrections with its own numbers
If there is a discrepancy, taxpayers may make the corrections in the electronic return and re-submit the return to the government. However, if an invoice is missing or there is an error within an invoice, the RCV cannot be edited by the taxpayer or SII. The only way to correct the registry is to issue a new invoice or a correction notice, so that the transaction appears as valid in the system (RCV).
With the government pre-filing tax returns, accurate e-invoices and acuse de recibo are more important than ever. Companies need a seamless solution to issue invoices, verify data, control the invoice acknowledgement process and verify the VAT declaration proposal against company records.
About the AuthorMore Content by Gustavo Jimenez