The New Electronic Bill Enactment and Its Implications for Fiscal Fraud

By: Fred Jankilevich – Jul 2017

Attorney At Law

During mid-December last year, the Costa-Rican Congress approved Section 9416 with the purpose of improving the scrutiny of Fiscal Fraud. Thus, Subsection Two of the instrument reads: “All taxpayers who are obliged must have the electronic means to register their transactions and issue proof of payment, according to the requirements that are duly enacted. These electronic means include, among others, the electronic bill as an instrument that is ideal and necessary for the emission of bills for their purchase and sales transactions, accounting registries and all other means required for tax control. Revenue Services are authorised to establish exceptions of diverse tax regimes via decree.” (No. 9416: December 2016)

 

In practice, the solution recoups up to 1% of sales taxes in order to fight Fiscal Fraud. The resources from the recoupment are re-distributed through Revenue Services to the Central Bank so that up to 0,5% of the yearly budget from sales tax collections and excise tax collections are destined to Information Technology and Information Security infrastructure to protect taxpayers from Fiscal Fraud.

 

As a result of the new legislation, starting on the date of the enactment of Section 9416, The Central Bank will have custody over the information, awarding accountability to the institution for: a) The admittance, storage and security of the information b) Enabling and controlling access for Revenue Services c) Defining pathways for auditing to determine the origin of access to the data

 

As a joint task-force and as a result of the legal instrument, the Costa-Rican DEA (ICD) will have a shared responsibility for the compliance of Information Security to ensure the integrity, reliability and confidentiality of the information.

 

While some controversy arises over the publicity of the banking databases in The Law, the legislators who wrote it hold some accountability for the responsible institutions from the pre-existing Tax Code (No. 4755: April 1971). As a result, while there is no Bank Secret in place pertaining to the records on the databases, the following provisions remain to protect Taxpayers:

1) The methodology utilised for scrutiny by the institutions responsible for compliance must remain public at all times

2) All exchanges of information between Costa Rica and other countries must be carried out in accordance to the Provisions of International Law

3) Tax inspection must be performed on a case by case basis and be formally delegated by the institution to the corresponding officer

 

Subject to the above stated provisions, the Costa-Rican DEA has full access to the Central Bank database information to carry out their functions enforcing Fiscal Fraud. The Electronic Bill is a gradual process that is being presently implemented by Costa-Rican Revenue Services as a result of the new Law. Therefore, the extent to which this new law and its goals are effective will become apparent within the next twenty-four to forty-eight months.

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