When an economic crisis is at its peak, it resembles a snowball: as this unstoppable force hits everything in its path, it grows, gains speed and takes everything and everyone on its way. For this reason, when an economic crisis strikes, it can be difficult for the country as a whole: access to credits is reduced and people cut back on their discretionary spending. At the same time, businesses also experience slower growth due in part to less investment. The result? Unemployment increases… while tax revenue falls off because fewer transactions are being conducted among other factors. In this blog, we are going to talk about how Latin America implemented different tax mechanisms and how Oracle NetSuite extensions provided compliance solutions with local knowledge to make businesses meet their global requirements.
Since these Latin American businesses operate under high-pressure circumstances, they feel tempted into unconventional practices to decrease their tax expenditure, eventually affecting the government itself in some way or another. Facing this situation, Latin American governments have become creative in fighting tax evasion to ensure their revenue is as minimally impacted by these practices as possible. In the next paragraphs, we’re going to discuss two electronic systems implemented by two of the biggest Latin American countries: Brazil and Mexico.
Let’s see the case of Brazil. In 2006, the Brazilian government created an innovative system to digitize and automate tax collection: the “Public System of Digital Bookkeeping”. Every invoice submitted for review is required by law to be formatted as XML, which allows authorities to evaluate the legal status of both parties involved in a transaction and check if they were issued accurately and whether due taxes were correctly applied and calculated.
Once the information is approved, the invoice is authorized and given an official number. With all of this information available, the government is able to know how much tax revenue there is for every transaction and collect taxes. This is why it is important to have specialized partners with updated local knowledge to ensure your subsidiaries are compliant. The LatamReady SuiteApp, for example, is an innovative Built-for-NetSuite solution that solves tax compliance and provides constant updates on legal requirements in Brazil, Mexico, Colombia, Chile and many other Latin American countries.
On the other hand, there is Mexico. The Mexican government has been using new technology to improve their operations and make doing business easier for companies. One such example would be the “Fiscal Digital Receipt,” which was introduced in 2004 with the aim of increasing efficiency while reducing paperwork. Though it did not move as quickly or have widespread adoption as other countries, by now most companies doing business within this country are subject to compliance obligations that include using electronic means for tax filing purposes too!
According to the “Declaración Informativa De Operaciones Con Terceros” (DIOT) it requires entities subjected to VAT to register a monthly form listing all paid bills per taxpayer. However, the formats and requirements are in constant change; this can mean a difficult challenge even for the best ERP in the world, but NetSuite offers the power of Native SuiteApps to extend its power and tackle these issues easily!
The facturación electronica in Latin America is a complex process that varies from one country to another. However, many countries in the region like Argentina, Chile, Colombia, Costa Rica and Ecuador, have been moving towards electronic invoicing in order to overcome some of the obstacles faced by paper-based systems. Several multinational companies doing business in the Mercosur region have been discussing the adoption of a single format for “facturación electrónica”. That might make things easier! But there are no concrete plans yet.
A key component behind a company’s success has been its ability to provide customized solutions across multiple industries while maintaining a true big picture. If you’re thinking of growing towards Latin American countries, you need to be aware of the ever-changing laws, but that won’t be a problem anymore!
The LatamReady SuiteApp extends the power of Oracle NetSuite Cloud ERP to enable international corporations to seamlessly achieve full tax compliance in 18+ countries in the region. Here you have a single solution for businesses that need a high level of compliance with international financial regulations. In addition, it provides many features, such as easy management of electronic invoices, tax determination and tax information reports, tax rules and tax calculation, electronic payments and many more features!
Is the LatamReady SuiteApp Right for My Company?
If you lead an international company using NetSuite and are considering rolling out projects in Latin America or scaling up in the region, consider the following:
- The LatamReady SuiteApp operates 100% within the Oracle NetSuite Cloud ERP –“Built-for-NetSuite”– meaning that your tax compliance solution will work natively inside NetSuite.
- The LatamReady SuiteApp is the solution for electronic invoicing, legal ledgers, taxes and withholding taxes that works in 18+ Latin American countries.
- LatamReady has the largest team of NetSuite experts in the entire Latin American region and provides support and online training in English, Spanish and Portuguese.
- LatamReady has over a decade of experience helping big international companies using NetSuite to achieve tax compliance in the region.
Chart a bold new path forward by embracing modern solutions to tax compliance challenges in Latin America with the LatamReady SuiteApp.
Our NetSuite Resources
As a NetSuite partner in Latin America, we have developed an impressive network of NetSuite resources, including webinars, demos and more. Check them out here: