EXPENSE SUPPORT

In the previous article we indicated that there are 4 fundamental requirements for expenses to be considered deductible for the purpose of reducing Net Income, which are:

1.     That the expense is from the fiscal period in which it is intended to be deducted.

2.     That the due Withholding at Source has been made and the same has been reported to the Tax Administration, otherwise, the expense will be deductible in the period in which said withholding is reported.

3.     That it is duly registered in the accounting and supported by documentation.

4.     That contributes to the generation of taxable income of the company.

In this article we will present some criteria to take into account regarding one of the most frequent concerns that we encounter: How do we bear our expenses properly? For this, we must first differentiate the type of expense that we want to support and that is what we will explain below:

I.               PURCHASE OF GOODS AND SERVICES

The ideal tax support for an expense is the formal INVOICE that meets the requirements established by current tax legislation, therefore, the commercial invoice no is admitted as support for an expense.

The invoice will be prepared in the printers authorized by the Tax Administration (the DGI has already published an official list) and must meet the following requirements:

a. Extenderla en duplicado, entregándose el original al comprador o usuario;

b. Emitirla en el mismo orden de la numeración sucesiva que deben tener según talonarios de facturas o documento;

c. That contain the date of the act, the name, company name or denomination and the RUC number of the seller or provider of the service, address, email and conventional or mobile landline telephone, where appropriate;

d. Indicate the quantity and class of alienated goods or service rendered;

and. Reflect the unit price and total value of the sale or VAT-free service, stating the reduction or discount where appropriate. Indicate the tax corresponding to the exemption, if applicable, specifying the reason for the exemption

In addition to the Invoice, you can also support the purchase of goods with machine tapes or computer tickets, provided that they are duly authorized by the DGI, for which it will be necessary for the tapes or tickets issued to contain the date of the act, the name, company name or denomination and the RUC number of the seller or provider of the service, address and telephone number, if applicable.

What happens if the provider of the good or service does not have invoices or authorized tapes?

In the event that it is not possible to have any of the documents of the last two points mentioned or that the transaction must be carried out with certain solemnities, we can bear our expenses with the preparation of a Public Deed or a Private Contract according to the case