The Panamanian fiscal system requires that any commercial transaction for the transfer of ownership of assets or the collection of fees for services provided be described and recorded in writing as an invoice for tax return purposes, which was issued by means of a fiscal printer, the Directorate General of Taxable Income (DGI) first issued Resolution No. 201-5784 of the 31st of August, 2018 authorizing the use of electronic invoicing by enterprises participating in a Pilot Plan for such purposes.
However, in the light of the various changes that have taken place in economic activities since the Declaration of National Emergency due to the pandemic, and the foreseeable increase in various kinds of activities during the process of recovery of the country, Executive Decree No. 766 of the 29th of December, 2020 was approved to establish the option of electronic invoicing according to a series of procedures, which we have simplified to submit as guidance for our clients within the national territory.
To begin with, not only individuals and legal entities excluded from access to fiscal printers by a resolution of the DGI may now use the electronic invoicing system, but also any individuals or legal entities may do so by simply applying to the DGI for admission to the use of electronic invoices as acceptable documentation for recording their transactions of purchase and sale of assets and their operations as providers of services.
Executive Decree No. 766 of the 29th of December, 2020 defines how and when and for what purposes can electronic invoices be used as “the electronic instrument in XML form, with purely digital existence backing and recording operations involving the transfer of assets and/or services”.
Such documentation must be issued through electronic means and with that form it is valid evidence of commercial operations for taxation purposes, but it must be signed electronically and validated by a Qualified Authorization Provider, whereupon it will be admissible value as evidence. Under the definition provided by Decree 766, electronic operations as credit and debit notes, importation and exportation invoices are admitted as evidence for fiscal purposes.
Generally, the electronic invoice is a digital fiscal document legally valid as evidence of commercial transactions between seller and buyer, signed electronically, whose content and authenticity is admissible evidence. Electronic invoicing has the following advantages:
The main advantage of the electronic invoice for the entrepreneur is the ability to establish an entirely automatic invoicing procedure, which is more convenient for the usual operational strategic procedures because the electronic invoice has the same admissibility as evidence as the invoices issued by the Fiscal Equipment and, therefore, its value as evidence is guaranteed by an electronic certificate issued by a registered service provider duly authorized by the National Directorate of Electronic Signatures of the Public Registry of Panama. It also saves operational costs such as paper, printers, ink, etc.
How can you start using electronic invoices
In order to be able to use electronic invoicing, the taxpayer individual or legal entity has to register as such with the DGI, the actual issuing of electronic invoices has to be authorized by a Qualified Provider of Authorization (PAC), which are legal entities authorized by the DGI to grant such authorizations, or otherwise it has to be issued by the Free Invoicer of the Electronic System of Panama (SFEP). This last system can be used only by:
Contents of an Electronic Invoice
Requirements to be fulfilled by enterprises in order to invoice electronically
Besides having an electronic device to produce the invoices, the following requirements must be fulfilled:
Correcting an Electronic Invoice
In the event that the user must correct an electronic invoice already authorized by an Authorization for Use, the user must do so by issuing an electronic credit or debit note through the web services of the Electronic Invoice System of Panama. If it has not been authorized, it may be nullified by registering the given situation.
If some technical problem prevents the issuer from transmitting or receiving a reply to the issuer’s request, the document must be issued in the mode of Contingency Operations according to the following requirements:
When the technical problems have been solved, all electronic invoices and other documents issued during the Contingency Operation must be transmitted according to the procedures described in the Technical Data Sheet. If the invoice is rejected, the issuer will have to produce the digital filing of the invoice once more with the same number and then transmit the information again to the DGI or the PAC until the proper Authorization for Use has been obtained. Then, an Electronic Invoice Auxiliary Evidence must be produced showing the correction of the information and finally the correction must be transmitted to the receiver, either by substituting the Electronic Invoice or the Auxiliary Evidence of Electronic Invoice or both.
Closing now, the main purpose of the issue of electronic invoices is that it will enable the DGI to have online access to all information about the transactions of the taxpayers for fiscal purposes.