Here is some great news for green-minded expats.
The Costa Rican tax department required all tax contributors to keep their account documents for five years and their accounting books up-to-date at all times. This meant gobs and gobs of paper and sufficient storage places to stash all the stuff. Not very green thinking.
In a country that pledges to be carbon neutral by 2021 — different politicians have used a variety of different pledge dates — not allowing companies to digitize their accounting was insane.
Until the very recent past, that was the rule. Everyone needed to keep all their accounting in boxes to support what was reported to the tax authorities. Well, good news, a recent request for clarification to the Ministerio de Hacienda, the mother organization of the local tax department found that according to a resolution DGT-02-09 from the Direccion General De Tributacion, dated Jan. 9, 2009, people can keep electronic documents and forget the paper.
The only two major requirements set forth by the tax department are that individuals and companies electing to keep their documents digitally must guarantee the documents cannot be altered by others. This means good security measures to protect the documents must be in place. Also sufficient backup procedures also must be maintained.
This may sound real simple in theory, but it is not in practice. Most people are lax in both areas. Many do not keep their computers up-to-date with the latest virus and firewall software because it costs too much money. In addition, people know backups are important but just never get around to putting a good backup system in place.
There is no excuse for not doing either. These days there are a multitude of free virus and firewall programs available and they sometimes rival programs one can purchase. Backup systems have come down in price drastically, and most backup equipment is designed for computer neophytes or, better stated, the downright computer dummies of the world.
Yes, granted, most of the accounting source documents an individual gets is on paper. Cash register tapes, invoices, cash receipt forms, credit card vouchers, and the list goes on and on. Many of the papers received in Costa Rica one cannot even read because they are printed on paper with microscopic printing or printed with a printer that has not had a ribbon replacement for years.
None the less, this paper can be recycled if it is digitized instead of stored in some storage area for years and years. Better yet, the mentality of people is changing. One now can request their light, water and phone bills digitally by having them sent to an e-mail address. Once received, the bills can be paid online and the bill and payment can be put in a digital filling cabinet without ever printing a piece of paper.
For novices to this digital world, the best digital filing system for Windows operating systems to store documents is made by Nuance — once called ScanSoft — and it is called Paperport. This program is easy to install, easy to use and comes free with many scanners.
Newer cellular telephones also make excellent expense-capturing devices. One just takes a picture of an accounting document and using the telephone e-mails the photo to oneself for accounting.
Most newer accounting systems today have incorporated ways to attach digital documents to transactions. Two of the best are Quicken and QuickBooks 2010. Intuit’s Quicken and QuickBooks products have been around for years. A newer company, called NeatReciepts, is great for individuals who are looking for something very simple to use for their expense tracking and document archiving.
The secret for everyone is to “think green” and use the new Costa Rican tax law change to improve and protect the environment. Thinking green is hard at first, but it gets easy real fast because people working green save money. They do not buy as much paper and they do not have to pay for those outrageous printer cartridges or laser toner refills.
Here is one example of green thinking and an accounting trick to avoid printing paper. Request all utility bills to be sent online to an e-mail address as mentioned above. Pay the bills using online banking, but when the payment receipt screen appears, do not print it. Use a function on everyone’s computer, called “print screen” or “Grab” and send the receipt directly to the computer and not to a printer.
The transaction can be posted to an accounting system like Quicken or QuickBooks and the bill and the payment receipt can be attached to the record. So no paper printed, and the tax department states this is 100 percent acceptable.
There is an added benefit for expats and people in general that think and live green. They do not have to lug accounting stuff around. It makes them more mobile. Everything they need to work and play in Costa Rica or in any other part of the world can be kept on a computer and backed up to a multitude of online sources. The data can be encrypted to keep it out the reach of prying eyes.
Green thinking is good. It saves money, makes one more mobile. It is good for the environment, and, best of all from a legal perspective, it complies with the law. The surprise is that it took environmentally conscience Costa Rica so long to come up with a rule allowing for digitizing documents.