Tax Compliance in Latin America: Your In-Depth 2023 Handbook

Facing Tax and Compliance Challenges in Latin America?

Over 80% of our clients have tackled Andean tax challenges. Explore our expert insights and success stories in tax and regulatory consulting.

In recent years, Latin American countries have made significant progress in tackling tax evasion and other illicit financial flows through transparency and exchange of information for tax purposes. The Punta del Este Declaration, a Latin American initiative established in 2018, is a key output of these efforts. The Declaration aims to improve tax transparency in the region by strengthening cooperation and exchange of information among tax administrations.

According to the OECD’s report “Tax Transparency in Latin America 2023”, the latest progress achieved by 16 Latin American countries ( including Colombia, Mexico) clearly demonstrates how jurisdictions that have developed and implemented a strategy to increase the use of exchange of information as a tool to support their audits and investigations gain tangible results. The report covers 16 Latin American countries and aims to inform decision-makers and citizens of the latest progress and remaining challenges in the region.

The Changing Landscape of Tax Compliance in Latin America

1. Regulatory Sophistication

Governments across Latin America have been enhancing their regulatory frameworks to combat tax evasion and increase revenue collection. This has resulted in more complex tax laws, regulations, and reporting requirements that businesses must navigate to remain compliant. This complexity often poses a challenge for multinational corporations and small businesses alike.

2. Digitalization and Automation

One of the most notable trends in tax compliance is the push toward digitalization and automation of tax processes. Many Latin American countries are implementing electronic invoicing, real-time reporting, and digital submission of tax documents. This shift aims to reduce the potential for fraud and underreporting while increasing transparency between taxpayers and tax authorities.

3. Cross-Border Transactions

Latin American countries often engage in cross-border trade, making transfer pricing and international tax regulations critical aspects of compliance. Properly documenting and justifying intercompany transactions has become essential to avoid transfer pricing adjustments and potential penalties.

Expert Insights on Tax Compliance in Latin America

To gain deeper insights into the challenges and strategies for tax compliance in Latin America, we reached out to Daniel Breitenmoser Ongresso Co-Founder & CEO – Ongresso with over 20 years of experience in the region.

According to Daniel, "Tax compliance in Latin America requires a proactive approach. Staying up-to-date with evolving regulations, investing in robust accounting systems, and maintaining clear communication with local tax authorities are key. Businesses must also ensure that their tax strategies align with their overall business operations to avoid any unintended compliance gaps. However, doing it on your own can be quite complex, so relying on local expert partners as Ongresso is a great advantage."

Let's explore the success story of VSM in Latin America, which saved more than 90,000 EUR thanks to our tax advice.

“Ongresso’s expert tax advisory helped us save EUR 90’000.- in annual taxes. Our Colombian subsidiary which serves as a regional hub became profitable for the first time since its foundation thanks to the tax analysis and recommendations of Ongresso.”

In conclusion, compliance tax in Latin America is an important issue that is being addressed by governments and organizations in the region. Significant progress has been made in recent years, but there are still challenges that need to be overcome. Businesses operating in the region should monitor developments in this area and prepare for new information reporting requirements associated with global tax policy changes.

I hope this blog post has provided you with valuable insights into compliance tax in Latin America for 2023. If you have any further questions or concerns, please do not hesitate to contact us for more information. Thank you for reading!