Q COSTARICA — If you use the Sinpe Móvil and make more than 100 monthly transfers to make payments or receive money at your business, there is a legal change that will take effect starting September 1st and could cost you millions of colones in fines if you are not careful.
Merchants and independent professionals must register in the electronic invoicing system.
This will allow the Ministerio de Hacienda (Treasury) and the Banco Central (Central Bank) to cross-reference transaction information to identify those who receive constant income through SINPE.
The goal is to have better control over the Impuesto al Valor Agregado (IVA) – Value Added Tax and income tax payments.
This is due to the implementation of version 4.4 of the electronic invoicing system, which incorporates a new specific code to identify payments made through Sinpe Móvil (code “06”), as well as other digital methods, including PayPal.
Merchants should follow the following steps to comply: first coordinate with their accountant, verify that their invoicing system is updated to version 4.4, register their systems provider with the Treasury, and, in the case of those using the free invoicing system, attend official training sessions.
One recommendation from tax attorneys is to separate your personal and business accounts. This way, you can better account for your business and the transfers you receive.
According to the Central Bank, the measure does not, in any way, seek to penalize the daily use of the Sinpe Móvil.
What is SINPE?
The Sistema Nacional de Pagos Electrónicos (Sinpe) – National Electronic Payment System, is a technological platform developed and managed by the Banco Central de Costa Rica. It connects the country’s financial institutions and public institutions through a private telecommunications network, allowing them to electronically transfer funds between accounts.
- To enroll in the service, the customer must contact the financial institution where they maintain the funding account they wish to link to their mobile phone.
- A mobile phone number must be linked to a single funding account.
- The Sinpe system allows you to view the balance of the account linked to the mobile phone number.
- The customer can view the latest fund movements applied to the account linked to the mobile phone number.
- The service operates with availability for customers 24 hours a day, 7 days a week.
Mobile payments are settled in real time (immediately) to customers’ funding accounts.
The Risks
There is a risk that this system will lose its appeal, which is the speed of transactions, and that many people will return to using more cash as a means of payment.
“It’s likely that businesses will see an advantage again when customers pay in cash, since if they pay by debit or credit card , a withholding will be applied, and that’s what will also happen now with Sinpe Móvil.
“It seems to me a very reasonable measure given the significant growth this system has had, which currently has no withholding element,” said German Morales, tax partner at Grand Thornton.
In 2024, more than ¢10.8 trillion were moved by Costa Ricans through this tool, up from ¢8.5 trillion a year earlier, reflecting its explosive growth.
The omission of invoices in Sinpe Móvil transactions could lead to multi-million-dollar fines, account freezes, and even criminal proceedings, so it’s best to be prepared and informed.
The omitted IVA and income tax may be charged retroactively, with interest, fines of up to 150% of the tax payable, account freezes and preventive seizures, and even the temporary closure of the business in the event of a repeat offense.
“The measure seeks to curb the use of personal accounts to receive payments from clients without filing taxes, a practice that constitutes tax non-compliance and could lead to multi-million-dollar fines and even criminal proceedings,” explained tax attorney Gabriel Zamora.
Undoubtedly, an impact on revenue is expected, since Sinpe Móvil would be a regulated payment, as is currently the case with credit and debit cards, in which the issuing entity withholds a tax as an advance on value-added tax and income tax.
To date, the Treasury has not yet recorded the revenue benefit, as it is only identifying the percentage of commercial transactions carried out through the SINPE Móvil platform and other platforms.
“Once identified, more effective control over these transactions will be possible, facilitating the fight against tax evasion and promoting the formalization of businesses,” stated Mario Ramos, Director General of Taxation.
The truth is that this will facilitate bank reconciliation and allow businesses to accurately understand the profitability of their operations.
“Having an electronic receipt to support the purchase of goods or services will ensure taxpayers greater control and transparency in their transactions, guaranteeing the service, and ensuring that their purchases are properly documented for tax purposes,” Ramos concluded.
Although the measure has generated concern in the formal sectors, those that will be harmed are the informal market businesses.