Substantial Increase in DGI Compliance Audits

In recent months, the DGI has implemented new audit plans that have increased considerably in frequency. The increase in the frequency of these audits has been so much that many of these audits have become redundant.

What is a Compliance Audit?

There exist 2 main types of audits that the DGI utilizes:

  1. Compliance;
  2. Fiscal.

The main difference between a compliance and fiscal audit is that the former is simply to make sure that the taxpayer is using fiscal documents correctly, permits are up to date and so on. So, for these types of audits, there isn’t a considerable time needed to be invested by the DGI, in fact they can quickly look through the documents for one month and penalize the taxpayer, as they seem fit.

When audited, a taxpayer may not necessarily be fined, but that is the intention that the DGI has.

Possible Triggers

The experiences that we have heard from both clients and colleagues is that the DGI has been very frivolous in deciding who should be audited and who should not.

What do we mean? Well, take for example a taxpayer that due to the current COVID-19 situation lost a considerable amount of business from one month to the next, well in many cases the DGI has contacted these taxpayers requiring to see the invoices from tax declaration of the month where there was no income among other documents, such as the legal accounting books.

We have even had some cases wherein a taxpayer has filed zero in more that just one month and for each month the DGI had initiated a compliance audit.

Proper legal procedure indicates that the DGI should notify the taxpayer in person and then the taxpayer should present himself/herself to the tax branch they are registered with and present in person the documents. Of course, the sheer volume of taxpayers that are now being subjected to compliance audits is so much that the limited amount of personnel of the DGI cannot handle them all.

To circumvent this problem, the DGI has even implemented electronic means of both notifying taxpayers of the audits and for receiving the documents. Therefore, these types of audits will increase exponentially.

What can you do?

The DGI will continue going through the list of taxpayers and most likely you will receive a notification requiring furnishing of documents.

There is no need to be surprised and neither should you be too concerned. If permits are up to date, you have blank invoices proving that there were no sales during the month they are asking information for and you comply with their request.

If you would like audit support or more information on accounting and taxes, feel free to contact us HERE. As an accounting, tax and payroll firm in Nicaragua, we would be glad to help you.

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