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Colombia

eInvoicing 101
Table of
Contents
Executive Summary...................................................................... 3

Colombia eInvoicing Scope....................................................... 4

Summary of Colombian eInvoicing Requirements............. 5

Qualification Procedure............................................................. 6

Process Architecture................................................................... 7

Document Types............................................................................ 8

Sanctions for Non-Compliance ............................................... 8

Selecting a Solution for Colombia eInvoicing ................... 9

Sovos’ Colombia eInvoicing Solution ................................. 11

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Colombia
eInvoicing 101
Executive Summary
In 2016, the DIAN, Colombia’s tax administration agency, announced the successful completion of
its eInvoicing pilot program that was designed to strengthen its capacity to enforce compliance and
reduce tax evasion, circumvention and contraband. As a result of the pilot program, Colombia was
able to improve procedures, address participant concerns and determine that electronic invoicing
systems performed to its standards. Since, the DIAN has launched its official eInvoicing legislation.

Today, Colombia is one of several countries to mandate electronic invoicing, a regulatory trend that
started in Latin America and is now sweeping across the globe.
When fully implemented, Colombia’s required documents
will tie together eInvoicing, receivables, payables, logistics
and libros (the sales and purchase ledger) for a holistic picture of
business transactions and tax liability.

The requirements in Colombia are constantly changing and


expanding into an increasing number of business process, and
these complexities make it critical for companies operating
in Colombia to have a defined, proactive strategy to
manage compliance. Companies that don’t
approach compliance strategically risk fines,
penalties and even operational shut downs
as officials enforce these mandates. To stay
compliant, taxpayers must seek a partner
that can not only help them comply with
what’s required today, but also is prepared
for what’s coming next.

In this eBook, we discuss specific


requirements in Colombia, the process
architecture involved in compliance, the documents
required and, most importantly, questions to ask as
your team evaluates potential solutions.

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Scope of the Colombian eInvoicing Mandate
According to the law 1819/2016, starting January 1, 2019, all VAT taxpayers are required to issue electronic
invoices in Colombia. The same law provides that the DIAN may require some companies to start issuing
and reporting electronic invoices before that date. Under that provision of the law, the DIAN issued two
resolutions mandating certain taxpayers to comply with the eInvoicing mandate during the second and third
quarters of 2018.

1. Taxpayers that requested a range of numbers 2. Large taxpayers designated by the DIAN:
for electronic invoices from the DIAN: The DIAN enacted Resolution 000010/2018
According to Resolution 000072/2017, any to mandate those companies designated as
taxpayer that requested ranges of numbers for large taxpayers by the DIAN in the previous
electronic invoices during the last five years is year. These companies must begin complying
required to start issuing electronic invoices. with the eInvoice mandate by September
The effective date varies depending on the 1, 2018. Large taxpayers that also meet the
number of invoices issued per month. Those qualifications of Resolution 000072/2017
that issue 3 million invoices or less per month must follow the dates specified in that
are required to start invoicing electronically resolution, not the large taxpayer resolution.
by June 29, 2018. Those above that threshold
are required to start issuing and reporting All remaining taxpayers are required to comply with
electronic invoices by September 29, 2018. the eInvoicing mandate starting January 1, 2018.

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Summary of Colombian eInvoicing Requirements
Colombia is among a unique group of countries focused on driving automation through its economy.
Ultimately, these requirements improve the government’s visibility into corporate transactions, ensuring
it is receiving accurate tax payments. However, these requirements have a hidden benefit of allowing
proactive companies to drive internal automation, improving accuracy and efficiency, and ultimately
decrease costs.
Below are some of the primary eInvoicing requirements in Colombia, which are similar to other
programs in Latin America:

• Standard format: The DIAN utilizes an XML • Validation: There is a 48-hour window


standard that all documents must follow. to send electronic invoices to the DIAN.
In the event that the invoice has an issue,
• Signature: Electronic invoices must have a corrections must be made within 48 hours.
digital signature to authenticate the integrity of
the invoice. • Contingencies and archives: Companies
in Colombia must be able to support
• Folios and unique identifiers: Companies must contingency invoicing in the event of
use consecutive numbering folios authorized transmission issues. They must report
by the DIAN, as well as a unique code for the transactions invoiced in contingency mode
electronic invoice identification number, called based on deadlines ranging from 48 to 1,440
a CUFE. hours, depending on monthly invoice volume.
• Testing and production: Invoices, credit notes Taxpayers must also maintain archives of
and debit notes must all pass through the testing transactions for five years.
and production environments before eInvoicing
can begin.

• Accounts receivable: Receivables must be


approved by the DIAN before sending an
invoice.

• Acknowledgement (Acuse de Recibo): When


receiving an invoice from a supplier, companies
must send an “Acuse” to the supplier
acknowledging invoice reception.

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Qualification Procedure (Habilitacion)
The fact that a company is mandated to issue and report electronic invoices does not automatically grant
them the right to do so. Before starting to issue invoices electronically, these companies must complete a
process locally known as “Habilitacion.”

• Step 1: Register as an entity authorized to issue electronic invoices via the DIAN website.

• Step 2: Indicate to the Electronic Invoice Computing Service of the DIAN whether they will be
invoicing directly or via a technological provider.

• Option 1: Invoicing directly: If this option is chosen, the taxpayer should inform the DIAN
of the software they will use for issuing electronic invoices and initiate tests to prove that
the software solution complies with the standards set by the DIAN. Once the tests are
completed successfully, the DIAN will provide corresponding approval. Only from that
moment is the taxpayer considered qualified to issue and receive electronic invoices.

• Option 2: Certified technology partner: Taxpayers deciding to use a pre-authorized software


provider simply need to inform the DIAN which solution they will use and update their
Unique Tax Registration to indicate the provider.

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Process
Architecture
A high-level summary of the
full process architecture is
illustrated here:

Folio Authorization: The first step in Colombia’s e-Invoicing process, after be entitled as electronic
invoicer, is to request a folio range from the DIAN. This folio range is a set of sequential integers that should be
included on each e-Invoicing document. Once issued, the XML folio block includes the starting folio number,
the ending folio number and a private/public key pair to be used during the signing process as each number
from the range is applied to individual documents over time.

eInvoicing: As companies create fiscal documents needing government approval, the required fiscal
attributes are extracted from the ERP and packaged into the standard XML format, which is then submitted
to the DIAN via web services. These web services are available for sending, validating, updating and status
retrieval. Upon initial submission of e-Invoicing documents, a message token is returned, which can be used
as an identifier in subsequent events to query for processing status or to obtain the approval codes available
once final processing is complete. Structure or communication errors will be communicate after document
submission, business errors like invalid codes or sums can be reviewed in the DIAN website after the document
is received..

Verification: Buyers must acknowledge receipt of inbound documents, though the DIAN does not
specify a certain format for this verification process.

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Document Types
There are 4 document types required in Colombia.

English Spanish

Invoice Factura

Credit Note Nota de Credito

Debit Note Nota de Debito

Invoice Acknowledgement Acuse de Recibo

Sanctions for Non-Compliance:


Companies that do not comply with the eInvoicing mandate are subject to fines of up to
15,000 UVT, set based on the following criteria:
• 5% of the invoice amount for which the required information was not provided.
• 4% of the invoice amount for information submitted in the wrong format.
• 3% of the invoice amount for late submissions.

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Selecting a Solution for Colombia eInvoicing
Compliance is a complex process – not a one-time integration. Companies must make regular updates to
maintain compliance and ensure all of their systems and processes are in order to avoid errors. That’s why
selecting the right eInvoicing solution in Colombia is so critical.

Below are key questions to ask regarding any potential solution:

ERP Process Expertise


80% of the cost to implement, monitor and so minimizing issues must be a core component of
maintain compliance with Latin America eInvoicing your compliance strategy.
legislation resides in the configuration of your • What happens when there is an issue?
business processes. • Who do you call?
• Is the vendor authorized for eInvoicing in
• Who fixes the issue?
Colombia?
• What if the issue is inside the ERP system?
• How is the data extracted and archived from the
• Who ensures that the data is synchronized
ERP system?
between all solution components?
• Do you have multiple solutions that reside outside
• Does the system automatically transition into
the ERP system? (The answer should be no! Your
and out of “Contingency Mode” so you can always
ERP should be the sole system of record to avoid
ship?
errors and discrepancies.)
• Can you reach someone in fluent Spanish,
• Do you have to manage a middleware connection?
Portuguese and English? (If not, you will spend
• Do you have a single monitor or multiple monitors,
as much time translating as you will isolating the
as this will affect your ability to support a real-time
mission critical issues.)
process?
• Do your users have to log into different
Change Management for New Legislation
applications?
Requirements change frequently in Colombia and
• Is your ERP the true system of record or is it the
throughout Latin America, making a proactive
third-party solution?
approach to change management critical.
• Does the solution offer both PO backed and non-
• What does the maintenance fee cover?
PO backed matching and workflows, enabling the
• Does the solution provider proactively keep you
AP department to reduce time and costs?
informed of the changes?
• Does the solution provide an inbound receiving
• Are all updates, including the labor, included in
process for the warehouse to simplify the receiving
the annual maintenance?
of goods via the invoice that arrives with the truck?
• Who installs the updates?
Enterprise Class Production Support • Do the updates cover all solution components,
or do you have to update the ERP system or
Errors, delays and discrepancies in eInvoicing can
middleware connections internally?
trigger operational disruptions, fines and penalties,

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Local versus Regional • Chile
Managing multiple local solutions makes compliance • Accounts Receivable – Sending
even more cumbersome; a regional solution ensures • Accounts Payable – Receiving
a centralized approach and single point of contact. • Reporting
There are constantly changing requirements in many • Peru
Latin American countries (breakdown of current
• Accounts Receivable - Sending
requirements below), and few solution providers
support multiple countries. • Accounts Payable – Receiving
• Reporting
• Uruguay
• Is your provider multi-lingual and able to • Accounts Receivable – Sending
implement, monitor and maintain in English, • Accounts Payable – Receiving
Spanish and Portuguese so your entire team
• Daily Summary Reports
(local and global) can access the same support?
• Ecuador
• Does your solution provider support one or
• Accounts Receivable – Sending
multiple mandated countries? More importantly,
how many processes are supported within each • Colombia
country? • Accounts Receivable – Sending
• Brazil • Acknowledgment (Acuse de Recibo)
• Accounts Receivable - Sending • Costa Rica
• Accounts Payable - Receiving • Accounts Receivable - Sending
• Electronic Accounting • Accounts Payable – Receiving
• eSocial - HR
• Mexico
• Accounts Receivable - Sending
• Accounts Payable – Receiving
• Electronic Accounting
• Nomina Electronica - HR
• Argentina
• Accounts Receivable - Sending

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Sovos – Colombia eInvoicing Solution
As the first and only software company offering businesses a global tax and regulatory compliance solution, Sovos
safeguards businesses from the burden and risk of compliance around the world. As governments go digital,
businesses face increased risk and complexity. Our solutions combine world-class regulatory analysis with a
global cloud software platform to create an adaptable and connected solution that keeps businesses ahead of
the ever-changing regulatory environment. Based in Boston, we have offices throughout North America, Latin
America and Europe and offer a variety of business applications and ongoing support to provide:

• Expertise gained from helping more than 4,500 • Guaranteed compliance. Sovos maintains
companies, including half of the Fortune 500, the regulatory processes on one network, so
simplify complex Latin America eInvoicing you don’t have the expense of researching,
requirements. Sovos is a certified DIAN integrating or maintaining compliance. With
technology provider and has achieved ISO constantly changing regulations, our service
27001 certification, ensuring customers that locks in your compliance for the life of your
Sovos is on the forefront of data security. contract. Never worry about the regulations
• Integration with complex ERP structures. or how they affect your ERP system again.
Companies need to know not only what the • Enterprise Class Production Support. Sovos’
regulations are, but how they affect ERP systems. 24x7 support in local language (English,
Country-specific ERP extensions enable your Spanish and Portuguese) resolves your
ERP system to transact with the tax authority issues in real-time, ensuring your business
while eliminating costly and intensive upgrades keeps running.
and configurations required by these constantly
changing regulations.

Intelligent Compliance
Sovos is pioneering the future of compliance, which is:

• Accurate: the only way to safeguard businesses from compliance risks is to ensure 100% accuracy and a
bulletproof audit defense. With today’s technology and process automation, that’s now an achievable task. 

• Data-driven: the standardization required for effective compliance gives companies new data-driven
insights for identifying issues and improving processes. 

• Proactive: In this ever-changing legislative environment, compliance professionals must constantly look
forward, providing insights to help their businesses predict what will change next. 

• Strategic: With standardization, automation and new levels of data, compliance should be used to enhance
business performance. 


Is your company ready for Intelligent Compliance in Colombia? Contact us at sovos.com.

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