E-Invoicing in Chile 101: Simplify Tax Compliance and Boost Business Efficiency

The Chilean government was the first to introduce voluntary e-invoicing in 2001. Since then, the country has continued to develop its e-invoicing infrastructure. In 2018, Chile’s Servicio de Impuestos (SII) mandated B2B electronic invoices for all taxpayers.

Even though Chile began voluntary e-invoicing earlier than many of its Latin American counterparts, mass implementation began later in 2014. It was later finalized in 2018 when the government enacted a new set of regulations.

On August 1, 2022, Chile relieved the requirement for taxpayers to submit daily sales reports. Instead, tax authorities will collect information using DTE (Electronic Tax Documents) data.

In Chile, an electronic tax document is the local term for an electronic invoice. Companies must register with the Chilean tax authorities, the Servicio de Impuestos Internos (SII), to issue and receive them.

In this article, we will provide an overview of Chile’s advanced e-invoicing regulation and discuss the following:

Whether e-invoicing is mandatory in Chile
How to send compliant e-invoices in Chile
Characteristics of an e-invoice in Chile
What businesses need to do to comply with the e-invoicing regulations in Chile.

Let's get started.

Is e-invoicing mandatory in Chile?

Chile mandated B2B e-invoicing in 2018, requiring all taxpayers to send valid Documento Tributario Electrónico (DTE) or Electronic Tax Documents to their counterparties. The SII validates all invoices in real-time.

A company has to register with Chilean tax authorities to receive a Código de Asignación de Folios (CAF) or Folio Authorization Code. This digital signature enables the company to send legally binding e-invoices.

Businesses must also register with a certified electronic invoicing service provider to issue and receive DTEs. The provider will help taxpayers meet the requirements of Chile’s e-invoicing regulation, including the format and content of the DTE.

What is the timeline for electronic invoicing in Chile?

Here, we’ll discuss how far electronic invoicing has come in Chile. Here are the key dates in its development:

2001: E-invoicing was introduced by the Chilean Internal Revenue Service and implemented as optional for taxpayers.
2014: The Chilean government made VAT e-invoicing mandatory for well-established organizations.
2018: In March 2018, the government went further to mandate B2B e-invoicing for well-established companies.
2021: B2C e-invoicing was mandated for established taxpayers in March 2021.

How e-invoicing works in Chile

The current e-invoicing system in Chile requires taxpayers to issue DTEs to the Chilean Tax Authority through the SII for validation. The system utilizes real-time capabilities for quick validation and informs the taxpayer about the status of the e-invoice.

To issue an electronic invoice in Chile, you must register with the Chilean Tax Authority system, SII, to get a Código de Asignación de Folios (CAF). This is an electronic signature that shows the invoice’s validity.

What are the electronic invoicing systems in Chile?

Chile’s Tax Authority offers taxpayers two electronic invoicing systems to generate and issue compliant invoices:

SII’s free invoicing system: Taxpayers with low-volume invoicing can use the SII’s free invoicing system. It allows you to generate and issue compliant electronic invoices seamlessly. However, it is not ideal for businesses with large volumes of financial data.
Proprietary or external invoicing platform: If a company has the resources, it can purchase or develop an invoicing system in-house. This can be tailored to meet the business's specific needs, but it can be quite costly. Businesses in Chile also have the option of partnering with an electronic invoicing service provider that can provide a platform for generating compliant DTEs.

Characteristics of electronic invoicing in Chile

Sending electronic invoices that comply with the Chilean Tax Authority’s regulations is essential for businesses operating in Chile.

The characteristics of an e-invoice in Chile include:

Format

XML is the required format for e-invoices in Chile. It refers to a syntax in which invoice senders and receivers establish a common language.

XML format ensures the accuracy of the invoice and makes it easier to transfer data from one system to another. Having a standard format also makes it easier to find and share invoices.

Digital signature

The Chilean Tax Authority provides a digital signature known as the Folio Authorization Code on electronic invoices. This cryptographic stamp ensures the document's validity and provides additional security to avoid fraud.

The CAF is a series of whole numbers unique to each e-invoice. It contains a personal key linked to the sender’s digital certificate. The CAF is valid for one year, and you must renew it.

You must submit electronic invoices with a valid CAF to comply with the Chilean tax authority. After verifying the information and confirming it complies with the regulations, they stamp the CAF on your invoice.

Time limit

The Chilean Tax Authority gives customers eight days to respond to an electronic invoice. The customer must accept or reject the invoice within this time frame.

If they don’t respond within eight days, the e-invoice will be automatically accepted. This helps avoid payment delays and makes it easier for businesses to receive timely payments.

Archiving

Recipients and issuers of electronic invoices must archive them for six years. This period is designed to ensure that businesses can easily provide the tax body with all the necessary documents in case of an audit.

Archiving e-invoices for six years helps protect businesses from potential legal issues. It also provides a record of all transactions, which can prove helpful in case of disputes.

Print format

Electronic invoices in Chile must include a PDF417 bar code for the tax authorities to accept them. The PDF417 bar code contains information about the invoice, such as the date of issue, sender and recipient, and amount.

It facilitates the tax body's automated processing of invoices. By scanning the bar code, they can easily verify the information in the invoice and confirm its validity.

Invoice information

For an invoice to be accepted in Chile, it must include certain information. This includes:

Unique sequential number

The electronic invoice must include a unique sequential number to identify it. This helps the tax authorities track all invoices and verify their validity.

Businesses should use the same numbering system for all their invoices, making them easier to store and retrieve. The unique sequential number must also be printed on the PDF417 bar code.

Supplier details

Every supplier must include their company name, address, and tax registration number on the invoice. This helps the tax body verify that the supplier is registered with them and authorized to issue invoices.

Customer details

The customer's information, such as their name, address, and tax registration number, must also be included on the invoice.

Tax authorities use this information to ensure the customer is registered with them and verify the invoice.

Description of the goods/services

The invoice must also include a detailed description of the goods or services provided. It may include additional information such as quantity and unit price.

The details must be clear and concise, as the tax authorities may use this information to confirm if the seller actually supplied the goods or services. These details are also necessary to determine the applicable tax and additional charges.

Total amount due and payment method

The total amount due and the payment method are important information for the recipient. They help them easily calculate any additional costs, such as taxes and fees, that may be applicable.

You should also include the due date and any relevant payment instructions. This ensures that customers know when they need to pay and how they can do so.

Rate and amount of VAT for goods/services

E-invoices in Chile must also include the rate and amount of VAT for the goods or services provided. The tax authority verifies this information to ensure that businesses accurately charge the right amount of VAT.

How to send compliant e-invoices in Chile

There are two options for companies to send compliant e-invoices in Chile:

1. Adapted accounting and invoicing software

If your company can afford to develop or purchase its own accounting and invoicing software, you can generate valid DTEs using an XML format. This option is expensive but can greatly improve your invoicing process.

Purchasing software is also a great option for companies with an existing invoicing system. They can simply buy the adapted version to start issuing compliant e-invoices.

The only challenge with this option is that the IT team must understand and adapt the necessary schema and ensure the invoices comply with the Chilean government’s legal requirements.

Let us look at the steps involved in sending an invoice through an adapted accounting software:

Step 1: Register with the Chilean government to obtain a Código de Asignación de Folios (CAF)

To start sending electronic invoices, you must obtain a CAF. This is a digital signature that shows the invoice is legally valid.

You apply for a CAF through the SII’s online portal. After providing some basic information, you will receive a unique code that identifies your company and authorizes your invoices.

Step 2: Generate your invoice in the XML format

Once you have a CAF, you must generate your invoice in XML format. This standard format is used to transmit e-invoices and tax documents in Chile.

The SII has defined specific requirements for the XML format, including the structure and order of data and its content.

Your adapted software should include all the necessary elements, such as customer and supplier information, description of goods or services, value-added tax (VAT) rate, and total amount due. All these elements must comply with Chile’s legal requirements.

Step 3: Send your invoice to the tax authority for validation

Before sending the invoice to your customer, you must validate it with the SII. This is a mandatory step that verifies whether your invoice is compliant with the Chilean electronic invoicing regulations.

You transmit your invoice electronically to the SII through a secure connection. Once validated, the SII stamps your invoice with your CAF. This is the only way to prove your invoice is compliant and legally binding.

Step 4: Send your invoice to your customer

Once the SII has stamped your invoice, they send it back to you. You can then send it to your customer electronically through email or a secure portal.

The customer may take up to 8 days to process the invoice. Once they accept it, they must acknowledge it in the SII’s online portal. They should also send you a receipt as proof of payment.

2. Third-party certified electronic invoicing service provider

For companies that don’t have the resources to develop their own software or who are not tech-savvy, a third-party certified electronic invoicing service provider is the best choice.

This is a simpler and more cost-effective solution than developing your own system.

The provider will provide a platform for issuing DTEs and submitting them directly to the SII. They will also assist with the format and content of the DTEs.

Let us look at the steps to sending compliant e-invoices in Chile:

Step 1: Register with SII and obtain a CAF

SII (Servicio de Impuestos Internos) is the Chilean tax authority. It monitors and enforces e-invoicing regulations and ensures businesses pay the correct amount of taxes.

To register with SII and obtain a Folio Authorization Code, companies need to submit the following information:

• Full legal name of the company

• Trade name of the company if different from the legal name

• Address of the company, including headquarters address

• Chilean taxpayer identification number (RUT)

• Type of business activity

• Signature of the legal representative

• Authorization of the legal representative

• Tax representative

• Electronic address of the company

After submitting the information, SII will verify the information by conducting an audit. Once the audit is successful, the company will receive a Folio Authorization Code.

Step 2: Register with an approved e-invoicing service provider

Ensuring compliance with Chile’s e-invoicing regulations can be complicated. You must ensure your invoices have all the required information, such as customer data, VAT rate, and amount.

For this reason, it is important to register with an approved electronic invoicing service provider. The provider will help you prepare and send compliant e-invoices and collect and store the relevant data.

A reliable e-invoicing provider such as Storecove will help you comply with Chile's electronic invoicing regulations. The provider will ensure your invoices have all the required information and are digitally signed with a digital certificate.

Step 3: Create and transmit an XML electronic invoice to the Chilean Tax Authority

After registering with an electronic invoicing service provider, you can easily create and transmit electronic invoices to the Chilean Tax Authority through the Servicio De Impuestos Internos (SII). The provider will help you create e-invoices in XML format, which is the required format in Chile.

When you transmit the e-invoice, the Chilean Tax Authority will verify the information in the invoice. If it is valid, it will add your digital stamp and issue a receipt to confirm that your electronic invoice has been accepted.

The tax authority sends the authorization back to your e-invoicing service provider. Once the invoice is accepted, it becomes legally binding, and you can send it to your customer.

Step 4: Sending the invoice to the customer

Your electronic invoicing service provider will store the electronic invoice, which you can easily send to your customer. It is sent through SII web endpoints, and the customer has eight days to respond.

In case of refusal, the customer responds by email so the seller can investigate. The customer can also request a refund or make any other necessary changes.

Once the customer accepts the e-invoice, it is legally binding, and the seller can receive the payment.

What are the types of electronic tax documents (DTE) in Chile?

The Chilean government considers various Electronic Tax Documents (DTE) to provide tax and legal support for all commercial operations. These documents include:

Invoices: This tax document is generated electronically and holds the same legal value as a physical invoice. It details products or services sold, payment methods, and unit prices, and requires prior authorization from the SII.
Purchase invoices: This document is issued when a seller is required to withhold VAT in certain transactions to support a purchase legally. It’s also used for taxable transactions involving vendors without proper tax documentation.
Non-taxable or exempt invoices: This document is issued for transactions exempt from VAT, often covering specific sales and services. It ensures proper legal support for tax-exempt operations.
Invoice settlements: This document consolidates sales settlements from consignment contracts and any agreed commissions between consignor and consignee. It is issued under Chile’s guidelines of Circular No. 126 of 1977.
Credit notes: A document used to cancel or adjust an already issued invoice. It corrects any invoicing errors or changes post-issuance.
Debit notes: Issued by sellers when adjustments are needed for the original invoice amount. It accounts for any changes that affect the invoice's total value.
Export invoices: Different from regular invoices, this document is used for exports and includes VAT-exempt features. It allows for foreign currency, transport details, and export-related information.
Export debit notes: This document is used to void or modify a previously issued export invoice. It adjusts or cancels the original export transaction.
Export credit notes: Generated when changes to the original export invoice amount are required. It accounts for any necessary price adjustments for exported goods or services.

What should businesses do to comply with the e-invoice regulations in Chile?

Businesses wishing to comply with electronic invoicing regulations in Chile can do so by following certain steps:

Implement an electronic invoicing system that meets the requirements of Chilean tax authorities

Businesses must use software approved by the Chilean tax authorities, allowing them to create, store, and transmit electronic invoices. The software must also generate a PDF417 bar code for the electronic invoice that contains all the necessary information.

The alternative is to use a certified third-party e-invoicing service provider such as Storecove. They provide a platform that meets the requirements of electronic invoices in Chile and other electronic tax documents.

Have a system that can archive invoices for up to 6 years

The Chilean government requires that digital invoices be stored for six years. This allows the tax authority to retrieve digital invoices during an audit or dispute quickly.

You should have a system capable of archiving digital invoices for this period and verifying the validity of digital certificates. This ensures that taxpayers can easily retrieve digital invoices when needed.

Invoice data is a vital aspect of digital invoices in Chile. It helps the tax authority verify that your business is compliant and that the right amount of taxes is paid.

Register for electronic invoicing with the Chilean tax authorities

This process is necessary to obtain a digital certificate to issue electronic invoices. It also allows the tax authorities to track invoices and other electronic documents.

The registration process is relatively simple and can be done online. You must provide the necessary documents and information to obtain the digital certificate.

Once approved, you will receive a digital signature, which you must use to sign every digital invoice. This digital signature proves that the invoice was issued by an authorized entity and is valid.

Submit digital invoices via the tax authorities' portal

The seller must submit the digital invoice through the SII portal. This ensures the tax body can track digital invoices and other necessary documents.

When submitting digital invoices through the portal, businesses must ensure that all necessary information is included. This includes invoice number, due date, payment terms, rate and VAT amount for the goods/services provided, and other relevant information.

Monitor digital invoice requirements

You need to stay up-to-date with the latest digital invoice regulations in Chile. Your digital invoicing system must be able to comply with any new requirements that the Chilean tax body may introduce.

If your business fails to comply with digital invoice regulations in Chile, there can be serious consequences.

Consequences of electronic invoice non-compliance in Chile

Businesses need to be aware of the consequences of failing to comply with digital invoice regulations in Chile. The penalties for digital invoice non-compliance can cause serious financial harm to your business and criminal action for those guilty of digital invoice fraud.

Here are some of the consequences:

Shipping products without electronic invoices: A case where a digital invoice is not presented or exported can result in fines of between $77 and $1,500.
Falsifying DTEs: Falsifying digital tax documents is one of the most serious issues related to digital invoice non-compliance. Companies can be fined between 50% and 500% of the tax due and will likely face criminal prosecution.

Managing invoice claims and acceptance in Chile

An invoice can be claimed if the delivery or amount indicated is unsatisfactory, products arrive in poor condition, or for other reasons. In such cases, an electronic credit note may be issued to rectify the situation.

The e-invoicing mandate in Chile requires recipients to claim an invoice within 7 days of receiving it from the SII.

If 7 days pass without any action being taken, the invoice is assumed to have been accepted. The SII has a feature that consults the information on claimed invoices, keeping issuers updated on the invoice’s status.

How to control invoices declared to the SII and not received by taxpayers in Chile

When an issuer delays sending invoices to customers, it may cause issues if a company cannot review and accept the invoice within the 7-day period. If the invoice is automatically accepted when it has an issue, there will be discrepancies in Form 29.

The best way to overcome this problem is to have a reliable e-invoicing solution that detects inconsistencies between Form 29 and daily DTEs. If an invoice is detected in the SII but not in your ERP, the system notifies the provider to send the DTE within a specific period.

Requirements for DTE document retention in Chile

According to the Chilean e-invoicing regulations, taxpayers must archive them for at least 6 years, considering the following instances:

The electronic issuer must generate and archive invoices in XML format, as required by the SII. Taxpayers should be able to access this stored data to fulfill any SII requests, and the issued electronic documents should serve as their accounting records.
The electronic recipient will receive the XML-formatted DTE through a previously agreed-upon electronic channel (currently email) and must retain this document to support their accounting records.
If an electronic invoice is issued to a recipient not authorized to handle such digital documentation, known as a "manual recipient," they must retain a printed version of the electronic invoice for their records.

Benefits of e-invoicing for businesses in Chile

Here are some of the benefits of e-invoicing for businesses:

Enhanced invoicing automation: E-invoicing allows businesses in Chile to streamline invoicing processes by automating tasks such as issuing consolidated e-invoices and managing billing systems. This automation reduces time spent on paperwork and human errors, improving operational efficiency and optimizing overall workflows.
Improved payment cycles: Implementing e-invoicing enables Chilean businesses to experience faster payment cycles. With electronic invoices, clients can verify and settle payments more promptly, contributing to improved cash flow and stronger financial management. The reduced time for invoice processing leads to fewer overdue payments, enhancing overall business performance.
Streamlined VAT submission and compliance: Chile’s e-invoicing mandate requires businesses to utilize electronic tax documents for VAT compliance. E-invoicing simplifies submitting VAT-related information, ensuring businesses meet regulatory requirements accurately and efficiently.
Increased data accuracy: E-invoicing improves data accuracy by minimizing manual entry and reducing discrepancies. Electronic invoices are generated automatically and accurately recorded, allowing businesses to maintain reliable financial statements.
Efficient management of electronic tax documents: E-invoicing enables companies to effectively manage electronic tax documents, which are crucial for complying with Chilean tax regulations. Organizing and storing these documents digitally makes it easy for businesses to access them quickly for audits.

Takeaway: Keep up with Chile’s digital invoicing regulations

Digital invoices are important for businesses in Chile to keep track of their finances and comply with the government’s regulations.

Businesses must properly register for electronic invoicing and submit digital invoices via the SII portal to ensure compliance with the Chilean tax authority.

Storecove supports businesses like yours by creating customized solutions that comply with tax authority regulations. Although our services are not yet available in Chile, we have successfully helped businesses in many other countries.

If your company requires support with e-invoicing in other regions, please Contact us today to see how Storecove works and how we can help you comply with the e-invoicing regulations.

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