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Update global e-invoicing & e-reporting obligations
2 April 2020
PwCPwC
About the presenters
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Director+32 (0) 472 60 30 [email protected]
• Heading up PwC’s Global Centre of Excellence on e-invoicing & e-reporting
Ellen Cortvriend
Director+32 (0) 496 51 30 [email protected]
• Co-leader of Belgian ITX TPC team (Technology Process & Controls)
• Marc has managed various international coordination projects for leading MNCs and assisted various clients to determine their TAX-IT strategy
Marc Hoessels
• Driver of multiple indirect tax technology and digitisation projects, with an emphasis on e-invoicing
• Actively involved in PwC’s Global Centre of Excellence on e-invoicing & e-reporting
Brecht Van Petegem
Associate+32 (0) 476 18 76 [email protected]
PwC
Update global e-invoicing & e-reporting obligations
Current and future indirect tax reporting requirements
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Fair share Increase revenue and decrease erosion of tax base.
Public opinion The tax morality debate. Damage to brand due to being portrayed as a bad corporate tax citizen in the media –
TransparencyRegulatory disclosure (e.g. UTP, country-by-country reporting, public disclosure of tax strategies.)
Direct taxes beyond their maximumDirect taxes no longer provide room for additional/new revenue. Governments attract investment through preferential tax regimes.Indirect taxes increasingly coming into play
ProtectionismNew wave of protectionism as driver for increased trade based taxation – trade wars & brexit
A rapidly changing complex framework
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Tax audits reaching record numbersDramatic increase in audits and disputes triggered by OECD BEPS initiatives and recent CBCR document.
Technological disruptionNew technologies & digital economy give rise to new business models, and new means to authorities and businesses
Data sharingIncrease in data sharing between governments and between taxpayer and tax authority including tax information sharing, FATCA, CRS.
Emerging tax systemsReal time reporting and analysis by tax authorities, especially in emerging markets (e.g. Brazil).
Tax governanceCooperative compliance drive across the OECD including SAO, tax strategy disclosure, Horizontal monitoring, risk based approach by tax authorities (inc UK, Australia, Canada).
Global environment
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Leading to a rapidly changing global tax reporting landscape…
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. . . 2014
2015
2016
2017
2018
2019
2020
Monthly VAT purchase & sales ledger in BG
SAF-T in PT, SI, AT & LU
E-Bilanz in DE
Fichier des Ecritures Comptables (‘FEC’) in FR
Periodical VAT control statement with transactional data in SK
Listings to be submitted together with VAT return in EE
SAF-T in TR
Split payment in IT
Electronic declaration VAT return in LV
SAF-T in PL & LT
E-invoice to be submitted to tax authorities in BY
“394 VAT statement” in RO
Real-time reporting in ES
Real-time reporting in HU
Mandatory B2G e-invoicing in the EU
Monthly VAT purchase & sales ledgers in electronic format in BG
Split payment model in PL
Making Tax Digital in the UK
Mandatory B2B e-invoicing in IT
SAF-T in NO
Real-time reporting in GR
Towards a US e-invoicing standard
CFDI in MX
SPED in BRGolden Tax III project in CN
Building Data Centre for all TA business in RU
© 2020 – PwC Belgium E-invoicing CoE – E-invoicing/e-reporting landscape
Mandatory e-invoicing in India
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PwCPwC
Polling question
Polling question
– Will COVID-19 accelerate your plans to work on further digitisation in your own organisation?
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PwC
Polling question – Will COVID-19 accelerate your plans to work on further digitisation in your own organisation?
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No/No idea Yes, we are/will also looking into digitised AP cycle
Yes, we are/will also looking into digitised AR cycle
Yes, we are/will also looking into digitising both AP and AR.
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3 4
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Polling question
– By embracing digitisation/automation, how much of your current AP/AR process do you think will be digitised in the next 2 years embracing tax technology?
Polling question
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Polling question – By embracing digitisation / automation, how much of your current AP/AR process do you think will be digitised in the next 2 years embracing tax technology?
No idea 1% – 10%
11% – 25% > 25%
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Accounts receivable Accounts payable Long term drivers towards AP/AR digitisation
● Electronic invoicing to avoid disruption in invoicing process to obtain faster payments, improved cash flow and ensure the continuity of services
● Facilitating supply chain finance
Early payment discounts & dynamic discounting
● Electronic invoicing to speed up AP invoice processing to ensure earliest possible recovery of input tax, ensure reliable cash flow planning and reduction of costs (e.g. for late payment) and other adverse consequences
● Cost reduction
● Data accuracy improvement
● Process efficiency
● Support of new (digital) business models
● Avoid security breaches
● Global legislative environment
PwCPwC
Indirect tax reporting requirements in EU
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EU Invoicing DirectiveCouncil Directive 2010/45/EU of 13 July 2010 amending the EU VAT Directive established equal treatment between paper and electronic invoices with the aim to promote the uptake of e-invoicing by creating the freedom of choice in ensuring the authenticity of origin, integrity of content and legibility.
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Indirect tax reporting requirements in EU
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Public Procurement DirectiveAll EU Member States have the obligation to implement Council Directive 2014/55/EU in their local legislation at the latest by 18 April 2020. This means that they are obliged to accept electronic invoices.Many governments have used this obligation as an opportunity to make electronic invoicing mandatory for B2G supplies, meaning that paper invoices are no longer accepted:
• Austria• Belgium• Croatia• Denmark• Estonia• Finland• France
• Germany• Italy• Lithuania• Slovenia • Spain• Sweden• And more to follow soon
Also other European (non-EU countries) have followed this example: • Norway• Switzerland
PwCPwC
Indirect tax reporting requirements in EU
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European countries with (upcoming)SAF-T requirements
AustriaSAF-T: e-filing of VAT relevant data on transaction level – introduced in 2009.
LuxembourgSAF-T: e-filing of VAT relevant data on transaction level – introduced in 2008.
FranceSAF-T (FEC): Compulsory electronic submission of accounting entry journal since 1 January 2014.
PortugalSAF-T: e-filing of VAT relevant data on transaction level — introduced in 2008.
LithuaniaSAF-T: e-filing of VAT relevant data on transaction level – introduced in October 2016
PolandSAF-T: e-filing of VAT relevant data on transaction level – introduced in July 2016. Heavily updated by July 2020
NorwaySAF-T: e-filing of VAT relevant data on transaction level – introduced in January 2020
RomaniaSAF-T: e-filing of VAT relevant data on transaction level – envisaged to be introduced at the end of 2020 or in 2021
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SAF-T structures to be submitted on monthly basis
SAF-T structures in Poland
• SAF-T VAT / new structure – JPK_V7M
The obligation to submit JPK_V7M applies from April 1st 2020 for the large entrepreneurs. Draft Act on the anti-crisis shield related to the COVID-19 epidemic assumes postponing the introduction of the obligation to submit JPK_V7 to July 1st 2020
SAF-T structures to be submitted on request
• SAF-T Accounting books
• SAF-T Sales invoices
• SAF-T Warehouses
• SAF-T Bank statements The files should be prepared by the Bank. Otherwise it is possible to submit the bank statements in other format available.
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Indirect tax reporting requirements in EU
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EU countries with real-time reporting of invoices/transaction data
HungaryReal-time reporting as from July 2018.
Data supply to the tax authorities in a predefined format for tax auditing is already required since 1 July 2017.
SpainReal-time reporting of tax data (“SII”) is introduced as from July 2017.
GreeceReal-time submission of electronic invoices and the electronic maintenance of statutory books to be introduced in the coming months (work in progress).
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Indirect tax reporting requirements in EU
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EU countries with mandatory B2B e-invoicing
ItalyMandatory B2B e-invoicing as from January 2019 (July ’18 for certain sectors)
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Indirect tax reporting requirements in EU
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EU countries that plan/envision/are rumored to introduce mandatory B2G/B2B e-invoicing:
• Portugal (envisaged by April ‘20)• Poland (envisaged by Nov ‘20)• Greece• France• Romania• Lithuania• Serbia• Finland• etc… ?
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Mandatory B2G e-invoicing
SAF-T requirements
Real-time reporting of invoices/transaction data
Mandatory B2B e-invoicing
Envisioned/rumoured mandates
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Summary Indirect tax reporting requirements in EU
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Inspired by the Latin American model
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• Launch of country-wide projects with the aim of reducing tax evasion
• Suppliers and buyers have to mandatorily send either invoice data or reports in e-format to the tax authorities for real-time validation & auditing (“clearance models”), prior to sending or making available to the buyers
• Huge impact on the invoice processing automation possibilities, cost of compliance and reporting requirements
• Implemented in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Peru,…
• Mexico is the leading country worldwide, having digitised almost all processes that are relevant for taxation
Clearance modelTax
Authorities
Supplier Buyer
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With impact to the Asia Pacific region
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Diverse and scattered e-invoicing landscape:• Clearance models (e.g. Turkey, Taiwan, Russia and India as
from October 2020)
• Open e-invoicing framework (e.g. Singapore, Hong Kong, Japan, Australia, New Zealand)
• Existing but evolving e-invoicing legislation (e.g. China, Japan, ...)
• Kazakhstan, Turkey, Taiwan, South Korea (having implemented e-invoicing mandates) and Singapore and Hong Kong (having a very open e-invoicing framework) are the most advanced countries in this region.
• A strong push towards e-invoicing by Australia and New Zealand to increase the adoption rate via the establishment of an e-invoicing interoperability framework (based on OpenPEPPOL)
PwCPwC
Africa
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The African e-invoicing market, beside some specific exceptions, has a more limited adoption rate• South Africa is the only African country having a robust market
for e-invoicing with a specific legal framework in place for many years now
• Angola, with the implementation of a new VAT system, is also requiring companies to produce SAF-T files and is implementing specific requirements for e-invoicing software (copying the Portuguese software certification model)
• Morocco is gradually implementing more technical requirements applying to invoicing software, which needs to be accredited by the authorities (no technical specifications have been issued yet)
• Kenia has announced they will issue a regulation on invoice issuance via Continuous transaction controls
PwCPwC
And finally, the US & the Middle East
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United States:• Open framework – Possibility of e-invoicing without major
requirements/obstacles imposed by law
• Notwithstanding this, the uptake of electronic invoicing is still rather low
• For that reason, the Federal Reserve launched an initiative under the “Business Payments Coalition”, a volunteer group of organizations and individuals working together to promote the greater adoption of electronic B2B payments and remittance data, to define an invoicing technical standard and interoperability framework fit fo the US market
• This could be the starting point to accelerate adoption and increases the number of invoices exchanged in the US
Middle East:• Currently exploring the introduction of clearance based invoicing models
after the implementation of a VAT system in the GCC region
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Roadmap future country mandates
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India
Mandatory e-invoicing – October 2020The intention of the Indian government is to register each business invoice to be a valid document. Therefore it has introduced the so-called Invoice Registration Portal (IRP). This means that (if the threshold is exceeded) all invoices between businesses must pass through this government e-invoicing platform in order to b considered valid.
Portugal
Mandatory B2G e-invoicing as from
April 2020.
Greece
MyData – As from June 2020 (deadline potentially postponed)The Greek Independent Authority of Public Revenue (IAPR) will introduce the electronic accounting books (e-books), which will be compulsory for all businesses obliged by law to keep their accounting records as per the Greek Accounting Standards.
Based on unofficial information we understand that e-invoicing seems to be optional for 2020. However, several guidelines have been published (including information on the certification process for e-invoicing providers)
Vietnam
E-invoicing will become mandatory as from 1 November 2020 – (potentially delayed until July 2022).
Poland
Mandatory B2G e-invoicing envisaged by November 2020.
France
Mandatory e-invoicing: 2023 – 2025The French Government has announced as part of its Finance Bill that it will introduce B2B mandatory e-invoicing (& real time reporting) by 2023 – 2025 at the latest.
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Technology as part of your AP/AR process
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Impact on businesses
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Ability to keep up to speed with changes and implement system changes and submission protocols
Requirement to have good systems, processes and/or partners (end to end) and ensure the quality of your data “in real time”
Digital links and API capabilities with (government) platforms
Closer collaboration with customers and suppliers to resolve issuesCloser collaboration x-tax internally for reporting
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Tax Control Framework
SOX controlsInvoicing Business controls
Proposed by government
Custom design depending on culture, geographical
focus and mket
Tailoring a minimum set of controls and testing to
assess suitability
Government controlled
e-invoicing/Real-time reporting
Imposed by government
Documenting processes and controls that meet their objective
More government insight calls for a proactive control framework
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Business need for own control environment
Transparency and bulk data to process in short notice requires controls
Reliable tax technology environment & tax
technology strategy
Described by government (OECD)
Horizontal monitoring approach
Verifiable assurance that information submitted is accurate & complete
Sufficiently formalised controls that can be audited
© 2020 - PwC Belgium E-invoicing CoE
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Tax data hub
Enterprise systemsSAPOracleMicrosoft DynamicsSageOther
Automated tax operations managementDocument
managementProcess management
and workflow CalendarData collection
Key deliverablesTax Returns – CIT, VAT, SAF-TBook/Tax ReconciliationPlanningAudit, etc.
Tax applications
Business intelligence and analytics – Dashboards
Tax datamanagement
Tax data mappings
Leverage all business tools
SharePointOther cloud based
Direct Connect
FinanceAP/AR
Real-time-reporting / Tax technology roadmap
Tax / Legal IT Third partiesProcurementO2C O2P
Together stakeholders define how your future ITX strategy will look like
PwCPwC
Data
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• The majority of Tax functions will receive all information in a ‘tax-ready format’ from either their enterprise-wide financial systems or a dedicated tax data hub.
• Dedicated tax data hubs will become mainstream and be developed internally, licensed from a third-party vendor, and/or accessed through an accounting firm as part of a co-sourcing arrangement.
• Data security will be high on the agenda of Tax functions due to concerns over confidential information being inadvertently released or shared publicly.
Data in tax-ready format Centralized tax data hubEnterprise systems
Licensedthird-party
Internally owned Co-sourcing
BuyBuild Rent
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From excelist to analyst
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More companies will use their enterprise-wide financial systems to prepare tax calculations (e.g., income tax accounting and indirect taxes), thereby replacing spreadsheets and/or traditional tax technology solutions.
The vast majority of Tax functions will rely on professional data analysis tools to assist in the decision-making process in areas such as detection of risk, opportunity identification, projections and scenario planning, and overall business support.
Spreadsheets
Enterprise systems New technology
Better decision making and enhanced strategic planning
Reduce global tax rate
Identify risks
Projections and predictive analytics
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How to deal with this accelerated pace of change?
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Real time reporting roadmap tax / legal requirements
Solution design / implementation Maintenance / updates
Depending upon the outcomes of the current-state maturity level assessment, companies will need a tailored, holistic transformation roadmap that addresses the process and technology needs, together with the associated risk management objectives.
Together with our technology experts we assess to what extent the requirements can be coped with by using existing solutions. In case the requirements could not be met by using your existing solutions we can provide guidance with the vendor selection of another solution.
• Weekly e-invoicing & e-reporting newsflash • “Formalised” update cycles will be performed
whereby local PwC experts will validate the current state of affairs in relation to the requirements mapped in your roadmap.
• Quarterly updates will be discussed in a workshop/meeting with representatives from tax, finance and IT.
Feel free to subscribe to our weekly e-invoicing & e-reporting updates
PwCPwC
Key takeaways
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Dealing with accelerated pace of change in the field of e-invoicing & e-reporting
Digitalisation of your AP / AR processes
COVID 19 - Right time to define your future digital ITX strategy / roadmap
Feel free to subscribe to our weekly e-invoicing & e-reporting update / newsflash ([email protected])
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PwCPwC
Contact
Director – Leader PwC Centre of Excellence on e-invoicing & e-reporting PwC Belgium+32 (0) 472 60 30 [email protected]
Ellen Cortvriend
Director – Co-leader of Belgian ITX TPC team (Technology Process & Controls)PwC BelgiumMobile: +32 496 51 30 80Email: [email protected]
Marc Hoessels
AssociatePwC BelgiumMobile: +32 478 18 76 06Email: [email protected]
Brecht Van Petegem
www.pwc.be
A leading global Network in more than 158 countries, with over 2.000 ITX experts and more than 12.000 technology consulting experts.
To date, the PwC e-invoicing Network has worked on e-invoicing and e-archiving related assignments in more than 158 countries around the world.
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Questions?
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Thank you!
© 2020 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
