By: Equipo Regional Tributario
As the years go by, taxpayers usually forget to update their data before the Tax Administration. It is extremely important to keep duly updated the data of the economic activities developed, the personal information of the legal representative, and the exact address of the tax domicile because this information is essential for the Tax Administration in the different mechanisms of verification and control of the tax obligations of the taxpayer.
The next question to ask is what is the benefit of keeping such records updated? Mainly because it facilitates compliance with tax obligations in general, avoids setbacks with respect to verification and verification actions by the Tax Administration and avoids penalties.
The following are certain considerations regarding the duty to update the taxpayer’s registry in the countries of the Central American region:
- Guatemala
The registration of taxpayers is regulated by the Unified Tax Registry Law or “RTU”. Derived from this registry, each taxpayer who registers is assigned a Tax Identification Number “NIT”.
The Tax Code regulates, within the violations of formal duties, the omission to notify the Tax Administration of any modification or update of data within 30 days from the date of the modification or update. This omission incurs a fine from Q50.00 (USD 6.41 approx.) up to a maximum of Q1,500 (USD 195 approx.) for each day of delay.
Likewise, the Tax Administration has the power to update the RTU ex officio or other records in its charge, according to the information provided by the taxpayer in any tax return. In the case of taxpayers who are exempt, according to the law, they must present their tax solvency to keep the registry updated as an exempt person.
The updating of taxpayers and their data is relevant in Guatemala for several aspects. In the case of legal representatives, they are responsible before the Tax Administration until they are modified, even if the appointment has expired. Therefore, it is relevant to consider that any change in the representation must be updated and modified in the registry before the Tax Administration. The same situation may occur in the case of the domicile of the company, since, if it is not updated, the communications and notifications made by the Tax Administration will be made at the domicile registered in the company.
- El Salvador
In El Salvador there is the Law for the Special Registry and Control of Taxpayers to the Treasury, which establishes in its Art. 1, second paragraph that, in the system for the special registry and control of taxpayers to the Treasury, the information regarding the identification of taxpayers, tax officers, importers, exporters and other formal obligors, as well as the subjects provided by law in tax matters, shall be registered and kept in a centralized, permanent and updated manner.
In the same sense, Art. 86 of the Tax Code establishes that the Tax Administration shall keep a taxpayer registry of the taxes it administers, according to the systems and methods deemed most appropriate.
The taxpayers who are liable to pay the different taxes administered by the Tax Administration, including exporters and habitual importers, must be registered in the above-mentioned Registry, in accordance with the assumptions established in this Code or in the respective Tax Laws.
According to Art. 87 of the Tax Code, the basic data of the Register are the following:
– Name, denomination, or corporate name of the taxpayer.
– Commercial name of the establishment(s).
– Tax Identification Number and Taxpayer Registration Number.
– Economic activity.
– Address to receive notifications and tax domicile.
– Name of the legal representative or proxy.
– Address of the head office, establishments, and warehouses.
In this sense, the fifth paragraph of the mentioned Art. 86 of the Tax Code states that taxpayers must inform the Tax Administration of any change that occurs in the basic data provided in the Registry, within five working days after the change is made.
Notwithstanding the above, some exceptions are established, as indicated below:
– Any modification of the Agreement of the Partnership or Partnership Agreement originated by changes of its members, representative, contributions, or participations must be reported to the Tax Administration within ten business days as of the day following the modification.
– Taxpayers are obliged to update the information corresponding to their address to receive notifications during the first ten working days of each year by means of the respective form. They are also obliged to report any change in the place to receive notifications within five business days following the change.
– During the ex officio tax assessment procedure, a change of address will only be allowed when there is an effective change of address and must be reported by the taxpayer or his attorney within five business days following the change.
Failure to comply with the obligations established shall be sanctioned in accordance with Arts. 235 and 237 of the Tax Code, as follows:
- Failure to communicate within the established term any change occurring in the basic data of the Register, a fine of two minimum monthly wages.
- Failure to inform or inform outside the corresponding term, the change or update of place or address to receive notifications by means of the respective form, a fine of nine minimum monthly salaries.
- Failure to inform or inform outside the corresponding term, the change of place or address to receive notifications, by the proxy appointed for such purpose, by means of a written document, a fine of five minimum monthly salaries.
- Failure to inform the effective change of domicile, place, or address to receive notifications, a fine of nine minimum monthly salaries.
- To fix or inform a false, inexistent, or incomplete place, address or domicile to receive notifications, a fine of nine minimum monthly salaries.
- Honduras
In accordance with the provisions of the Honduran Tax Code, taxpayers are required to register with the Tax Administration and obtain their tax identification known as the National Tax Registry (RTN). The procedure is done through a process called “Inscription”, where the general information of each taxpayer is obtained through a pre-printed form SAR-410. The tax administration performs some verifications and proceeds with the generation of the RTN or tax identifier.
Likewise, the referred Tax Code establishes that taxpayers must notify in writing or by electronic means legally recognized and authorized by the Tax Administration, any change that may cause a modification of their tax or customs liability, without prejudice that the Tax Administration verifies the veracity of the changes notified.
This procedure is carried out directly before the Revenue Administration Service (SAR). It is known as updating of the National Tax Registry (RTN) or updating of data and consists of updating or modifying the general data of the different taxpayers.
The modifications that must be notified to the SAR are those susceptible of modifying the tax conduct or general data of the oblige, such as, for example:
- Changes in the general data: in the denomination, changes of address, or changes of e-mail and telephone number established at the time of obtaining the RTN.
- Changes at the commercial registry level: modification of the legal representative, board of directors or board of directors depending on the type of taxpayer, partners, or shareholders.
Initially, this procedure was only performed in person at the SAR offices. Currently, it is done online through the SAR platform, where the forms (SAR-410 and 410 B) are completed with the data to be updated. Subsequently, they are uploaded with the supporting documentation that proves the changes that are being made and after a review by the tax authority, an Update voucher is issued for the taxpayers’ files.
It is important to mention that this new administration is requesting, prior to making any request or procedure, that the taxpayer’s data be updated in the system, since, if such data is not up to date, it must first be updated and then the desired procedure or request must be made.
It is also important to keep in mind that the Tax Administration has the power to carry out audits or requests for information to the taxpayers, and not having the data updated could mean a penalty for noncompliance with formal obligations.
- Nicaragua
After the tax reforms that came into force in 2019, it was established the obligation to update the data in the Single Taxpayers Registry (RUC) every two years. In this sense, taxpayers have the obligation to keep their records and information updated before the Tax Administration, for which, at least every 2 years they must perform this updating process or report that there have been no modifications. However, in accordance with the tax legislation in force, taxpayers will have a 30-day term to request an update before the corresponding Tax Administration every time they make a relevant modification.
Some of the general data that must be kept updated are:
- Amendments to the Articles of Incorporation.
- Change of tax domicile.
- Change of legal representative.
- Modifications to the shareholder composition and current board of directors.
- Main and secondary economic activity.
- Decrease or increase of capital stock, etc.
To comply with these formal obligations, the General Directorate of Revenues has an inspection plan, therefore, the tax authority may notify Tax Information Requirements (RIT) through which they order to update the general data of the company and a term of 10 business days is granted to the taxpayer to provide all the information and documentation required by the authority. Mainly, this type of requirements usually happens when a taxpayer has not updated its data for a long time.
The Tax Code of the Republic of Nicaragua and its amendments establishes an administrative infraction for failure to comply with this formal obligation of 30 to 50 units of fine for each month of delay or failure to update. Taking into consideration that each fine unit is equivalent to 25 córdobas (USD 0.69 approx.), the pecuniary sanction will be from 750 (USD 20.65 approx.) to 1,250 (USD 34.41 approx.) córdobas for each month.
In practice, it is common for companies to confuse the term of validity of the RUC (tax identification) card with the obligation to update data, since they do not report substantial modifications within the 30-day term, erroneously considering that it is not necessary because the RUC card is valid for 2 years. However, regardless of the validity of the tax identification card, the taxpayer has the obligation to report these changes within the legal term. Additionally, some cédulas issued in PVC format do not have an expiration date, but this does not exempt the taxpayer from complying with its obligation to update its data every 2 years and many companies with this type of RUC cédulas do not carry out this data update procedure.
Finally, it is important to mention that we have identified some practices on the part of the Tax Administration, such as linking one taxpayer with another due to its shareholder composition, legal representative or board of directors. This causes that the insolvency status of another taxpayer that shares shareholders, representative or director affects our company, which can generate rejections in the different procedures before the Tax Administration and even blockages of the Electronic Tax Window (VET). By virtue of the above, it is important to keep the information in the Single Taxpayers Registry (RUC) updated to avoid this type of affectations.
- Costa Rica
All taxpayers must provide the information requested by the Tax Administration that allows a clear identification of each taxpayer, such as the main and secondary economic activity, the domicile of the economic activity (including the identification number of the electricity service and the name of the electricity company), the name of the legal representative, the address of the tax domicile, the address of the legal representative’s home and the personal or social identification of the person who registers, data of auxiliary establishments, among others.
When any of these data are modified, the taxpayer must proceed with the filing of form D-140 within a period of one month from the date on which the variation originates. In spite of this, taxpayers often do not keep this obligation in mind. Therefore, the Tax Administration may ex officio carry out a registration, modification or deregistration ex officio.
A typical case is the failure to update the economic activity or to include secondary economic activities. An omission in this update could imply that the company is included in the Annual Audit Plan for an activity that is not part of its true line of business. For example, the company ABC in 2007 was registered as a taxpayer in the economic activity of construction. However, in 2019 it started the digital printing business and ended the construction business. Recently, it has been notified of an audit start for 2020 due to the fact that its construction activity is part of the Annual Audit Plan. This audit would not take place if the company had updated its economic activity with the Tax Administration.
The economic activity registered by the taxpayer defines the tax obligations to be met. That is to say, if a taxpayer registers in the activity of renting premises, he will immediately be registered with the obligations of real estate capital income tax (form D-125), value added tax (form D-104) and tax on legal entities. The obligations will be different for a taxpayer who registers in the construction activity since it will be linked to the tax on profits (form D-101) and not to form D-125.
Likewise, if an activity is terminated or a legal entity is merged or dissolved, it is essential that the Tax Administration is notified of such situation. Failure to comply with such duty, the Tax Administration system will continue to maintain the registration and the obligations will be generated and will be unsatisfied, remaining under an omitted condition.
Another common situation that usually happens is that the company does not update its domicile or that of its legal representative. Therefore, the Tax Administration notifies at the address shown in its records and thus the communication is valid. In addition, the taxpayer’s domicile determines the Tax Administration’s competence to carry out audits.
It should not be overlooked that failure to update the taxpayer’s data before the Tax Administration means a penalty of 50% of one base salary per month or fraction thereof, without exceeding the equivalent of three base salaries. In other words, the penalty could amount to ₡231,100 (USD 407 approx.), with a maximum of ₡1,386,600 (USD 2,445 approx.), without contemplating eventual reductions that could be applied.