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Aug

Electronic Invoicing in the Dominican Republic is a system for issuing, transmitting, and storing invoices in digital format that replaces traditional physical invoices. It is regulated by Law No. 32-23, enacted on May 17, 2023, which establishes the widespread adoption of electronic invoicing as the mandatory form of commercial invoicing. It uses e-CF (Electronic Invoicing Code) to ensure authenticity and integrity.

Electronic invoicing is the newest development in the tax, commercial, business, and corporate systems, aligning with the practices of various Latin American countries that have already implemented this system, such as Colombia, Mexico, Brazil, and others.  Therefore, it is no surprise that the Dominican Republic is implementing the same system, as it reflects the global trend.

What is Electronic Invoicing?

Electronic invoicing is characterized by not requiring paper printing. Unlike the traditional system, it includes the General Directorate of Internal Taxes (DGII) as a direct third-party participant in the process.

How Electronic Invoicing Works and How It Differs from Traditional Invoicing

A key difference of Electronic Invoicing in the Dominican Republic, compared to traditional invoicing, is that it directly involves the tax administration in the invoicing process. This helps prevent tax evasion, as every time an invoice is issued, it is immediately connected to the regulatory authority (in many countries, called the Treasury, Tax Office, etc.; in the Dominican Republic, it’s the DGII).

The Process and Functioning of Electronic Invoicing can be summarized as follows:

• The issuer generates the invoice using software approved by the DGII.
• The invoice is digitally validated and receives a Unique Electronic Registration Code.
• It is sent to the recipient electronically and stored for tax audits.

The benefits of electronic invoicing compared to traditional invoicing include:

1. Shorter wait times: As soon as an invoice is issued or registered, it connects with the tax authority, unlike the traditional system, which requires later registration. This greatly reduces the workload of manual data entry.
2. Cost-effectiveness and efficiency: No need to print; the invoice is sent via email to the recipient. This helps with sustainability and environmental protection, causes we support.
3. Accuracy: Lower margin of error.
4. Organization: Better organization for all parties involved.
5. Format: Electronic invoices are fully digital, while traditional ones can be physical or digital without fiscal validation.
6. Validation: Electronic invoices must be authorized by the DGII in real time and can be validated instantly by scanning the QR code with the DGII mobile app.
7. Traceability: Electronic invoicing allows for more detailed control by the internal tax authorities.
8. Among other advantages.

 Legal and Regulatory Aspects

The  legal framework for electronic invoicing in the Dominican Republic is Law No. 32-23

Steps or Recommendations for Implementing Electronic Invoicing in a Company

To implement electronic invoicing, taxpayers must have a National Taxpayer Registry (RNC) and an active Virtual Office account.

Steps to follow:

1. Request authorization from the DGII: Register as an Electronic Issuer by completing the application form.
2. Acquire a digital signature: Mandatory to validate electronic invoices.
3. Implement an approved invoicing system: Use or develop software certified by the DGII, either through an authorized electronic invoicing service provider or by using the DGII’s free invoicing platform.
4. Train staff: Ensure proper handling of the system.
5. Conduct tests: Validate correct operation with the DGII.
6. Start issuing electronic invoices: Once authorized, begin invoicing electronically.

Are e-invoices mandatory?

The use of electronic invoices is mandatory throughout the Dominican Republic as of the effective date of Law 32-23. Taxpayers must implement electronic invoicing systems according to the schedule established by the DGII.

Electronic Invoicing Implementation Schedule

The implementation process is gradual, based on the timeline defined by the DGII:

• Phase 1: Taxpayers contributing significant amounts, no later than twelve (12) months from the effective date of the law (deadline: May 2024).
• Phase 2: Taxpayers contributing moderate amounts, no later than twenty-four (24) months from the effective date of the law (deadline: May 2025).
• Phase 3: Small, micro, and unclassified taxpayers, no later than thirty-six (36) months from the effective date of the law (deadline: May 15, 2026).

Is There a Maximum or Minimum Amount for Electronic Invoicing?

There is no specific minimum or maximum amount established. Any transaction requiring a fiscal invoice must comply with DGII requirements, regardless of its value.

All companies, corporations, partnerships, trusts, etc., in the Dominican Republic must implement this system. The main types include:

1. Sole Proprietorship with Limited Liability (EIRL in Spanish)
2. Limited Liability Company (SRL)
3. Simplified Joint Stock Company (SAS)
4. Joint Stock Companies (S.A.)
5. Branches or subsidiaries of foreign companies, corporations, or partnerships operating in the Dominican Republic.

Economic and Fiscal Impact

Electronic invoicing facilitates the monitoring and enforcement of tax obligations, reduces tax evasion, and speeds up tax collection. Additionally, it supports sustainability by reducing paper consumption.

Frequently Asked Questions about Electronic Invoicing in the Dominican Republic

What is the Electronic Invoicing Code (e-CF)?

The e-CF is a unique code assigned to each electronic invoice issued. It guarantees the authenticity of the invoice and allows for its validation by the DGII.

What kind of software do I need to issue electronic invoices?

You need software approved by the DGII. This software can be internally developed and purchased from certified external providers, or you may use the free invoicing software provided by the DGII.

How can I obtain a digital signature?

A digital signature can be obtained through certification entities authorized by the DGII. It is a mandatory requirement to validate electronic invoices.

What should I do if I have technical issues with my electronic invoicing system?

You can contact your invoicing software provider or reach out directly to the DGII for technical support. It’s also recommended that your company or business have an IT-trained team to help manage these situations.

Can electronic invoices be rejected?

Yes, electronic invoices can be rejected if they do not meet the requirements established by the DGII. In such cases, they must be corrected and resent for validation.

What happens if I do not implement electronic invoicing within the established deadline?

Failure to implement electronic invoicing within the timeframe set by the DGII may result in penalties and fines. It is therefore important to follow the implementation schedule to avoid legal and tax issues.

How are returns and credit notes handled in electronic invoicing?

Returns and credit notes must also be issued electronically and follow the same validation and registration process as the original electronic invoices.

Legal Recommendation

You should begin the implementation of electronic invoicing instead of waiting for the scheduled implementation deadline based on your business sector. This will help you have better control and organization of your tax obligations, reduce costs associated with paper consumption and invoice storage, and most importantly, avoid fines and audits for non-compliance.

Seek legal and tax advice to ensure that your company complies with DGII regulations.

Conclusion

Adapting to electronic invoicing is essential to remain competitive and compliant with tax regulations. Since tax evasion is penalized, fulfilling your tax obligations helps you avoid trouble and maintain peace of mind.

We have discussed taxes in the Dominican Republic in other articles, including:

–       Duties and Responsibilities of Companies in the Dominican Republic.

–        Main Taxes in the Dominican Republic.

–        Income tax (ISR) in the Dominican Republic.

–        Taxes and Management of Capital Repatriation in the Dominican Republic.

If you want to learn about the most important taxes and how to remain compliant, we suggest you review the articles listed above.

At our law firm, Morillo Suriel Abogados, Attorneys at Law, we have a specialized division in Tax and Corporate Law – Business in the Dominican Republic, through which we can assist you with any questions or consultations you may have on the topic at hand.