Very little is more time-consuming and complicated than monitoring and complying with corporation taxes. Whole departments within organizations are set aside to understand the intricate tax laws in their regions. Withholding, corporate, VAT (value added tax) are just a sample of the taxes Latin American companies have to account for. Many ERPs (Enterprise Resource Planning software) struggle to meet the needs of the Latin American marketplace. It’s diverse and flexible. Their taxes could be broken down by province, municipal, country, but they are all a requirement of any company who wishes to expand into the lucrative forum Latin America is becoming. Oracle+NetSuite, the top performer in the ERP industry, and LatamReady, the name trusted across the US & UK when companies want to work within Latin America, meets those challenges head on.
If an organization is split into multiple countries across Latin America where every country is different when it comes to tax compliance, it’s even more labor-intensive to ensure the taxes are withdrawn correctly and reported accurately. That’s where Oracle+NetSuite comes into play. Oracle+NetSuite is the #1 Cloud ERP option for the United States and Latin America. Combined with LatamReady SuiteApp, it’s a comprehensive software package that’s robust enough to incorporate tax functions in more than 10 Latin American countries while also untangling the multifaceted complexities of withholding taxes in those Latin American countries. With the addition of the long-trusted LatamReady implementation experience, suddenly: your organization’s ERP can handle any tax law a country puts into place.
What is Withholding Tax?
Withholding tax in the US is traditionally the amount of an employee’s pay withheld by the employer and sent directly to the government as partial payment of income tax. In Latin America, withholding tax (locally known as Impostos Retidos na Fonte or Retención de Impuestos) is used in a different manner. It’s defined as “a government requirement by the buyer to deduct a certain amount from the payment made to the supplier.” Taxes such as VAT (value added tax) are used in various countries to accommodate this, both on the buyer and on the seller.
Another specific tax for Latin America is Collection tax (locally known as Substituiçåo/Antecipaçåo Tributaria or Percepción de Impuestos). This is the government requirement for the supplier to collect an advance payment of a given tax from the buyer. VAT is used by the seller here as well.
Tax Law in Latin America
What most companies need when they reside in Latin America is flexibility. Oracle+NetSuite and LatamReady SuiteApp combined solution understands that Latin America is growing in leaps and bounds when it comes to a global market. Peru, Bolivia, Uruguay, and others have to occasionally shift and modify their tax laws to accommodate their growing global presence. The resources are there, the consumers are there, and the companies investing in Latin America have to be willing to make way for those transitions. Oracle+NetSuite and LatamReady SuiteApp are. They understand the ins and outs of corporate tax and withholding. This ERP understands the VAT (value added tax) and how it applies with withholding for goods and services.
- In Brazil: they have over 80 different taxes. Out of corporate and VAT taxes, some apply differently—or do not apply at all—depending upon whether a transaction involves a good or a service.
- In Argentina: while there may not be as many taxes, withholding and collection taxes can be found at all levels of the government (federal, provincial and municipal levels). And withholding and collection taxes are applied within almost all tax categories.
- In Mexico: the withholding boils down to two – income tax withholding regime and the VAT withholding regime; both apply at the federal level.
These are major differences just between three countries. Oracle+NetSuite and LatamReady are prepared to assist accounting departments in over ten countries. To maintain all of their different regulations is a huge component of their ERP. The challenges this ERP addresses are numerous but when reviewing withholding tax law in Latin America the major challenges consist of:
- Multiple levels and organizations to report to (municipal, provincial, federal, etc.).
- Multiple methodologies to consider such as differing rate, calculations and who is applying the tax (which country, which level of government, etc.).
- Frequent modifications due to legislative changes as Latin America takes a stronger stance in the global marketplace.
- High penalties are not unheard of when a company fails for compliance. 100 percent of the tax due, in some cases.
LatamReady, as a full NetSuite Implementation Partner, and LatamReady SuiteApp, the #1 NetSuite localization package for LatAm, are aware of the need for trustworthy software that can move fluidly between these ever changing regulations. That’s why they’ve partnered with Oracle+NetSuite, a leader in the industry for ERPs. Together they allow their clients to concern themselves with more pressing needs of running a business, leaving the taxes to Oracle+NetSuite and LatamReady SuiteApp
Electronic Invoicing and How Oracle/LatamReady is Making Things Easier
One of the key features Oracle+NetSuite and LatamReady SuiteApp are bringing to the table is electronic invoicing. This regulation is becoming mandatory in several key Latin America countries and having an ERP that can manage the invoicing and their withholding tax laws is a must.
LatamReady provides a seamless implementation of Oracle+NetSuite’s cloud-based ERP. This implementation includes electronic invoicing that meets the compliance standards of over 7 countries in Latin America. LatamReady SuiteApp was created with the sole purpose of meeting the localizations and regulations of Latin American governments, and ensuring their clients can maintain the level of excellence Oracle+NetSuite has always provided. International business is thriving within Latin America, largely due to the standards LatamReady has been able to comply with for their many Oracle+NetSuite clients.
Oracle+NetSuite already supplies their clients with the best ERP on the market for a number of features. LatamReady, #1 US+Multi-Latin NetSuite Implementation Partner, brings that software to Latin America and makes it compliant with the regulations this bustling corporate world requires. Together they’re making the tax compliance for US & International companies operating in LatAm as easy and painless as possible.
LatamReady: One Region, One Key. “LatamReady and Oracle NetSuite Offer Experience and Flexibility for Electronic Invoicing in Latin America to US International corporations.” LatamReady: #1 US Multi-Latin NetSuite Implementation Partner, 13 Sept. 2017, latamready.blog/2017/02/06/netsuite-electronic-invoicing/.
NetSuite Electronic Invoicing App, YouTube, 15 July 2016, www.youtube.com/watch?v=pw3022rB8yI&feature=youtu.be.
Maciel, Ana Paula; Levy, Ernesto. Withholding Taxes in Latin America: B2B Domestic Transactions, Vertex, Inc. January 2017.
NetSuite.com. “NETSUITE IS #1 IN CLOUD ERP.” Business Software, Business Management Software – NetSuite, http://www.netsuite.com/portal/home.shtml?noredirect=T.
“Critical Capabilities for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises.” Gartner Reprint, http://www.gartner.com/doc/reprints?id=1-4AGG8O0&ct=170817&st=sb.