Argentina Electronic Invoicing and Reporting Requirements

INVOICEWARE INTERNATIONALGlobal Compliance - Simplified

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Background

Legal requirements for invoicing are changing in Argentina. The Administración Federal de IngresosPúblicos (AFIP) announced that all companies doing business with VAT related invoices in Argentina will have to issue electronic documents starting July 1, 2015 (RG 3749).

While they are mandatory for some industries, others are still receiving future timelines from the Argentinean tax authority Administración Federal de Ingresos Públicos (AFIP). Over 300,000 transition during 2014 to electronic invoicing. Today organizations need to consider solutions for Type E export invoices, as well as the regulations for domestic (Type A and Type B) invoices.

In 2016 there will be changes to the libros reports to achieve Proforma VAT across Argentina.

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Tax Authorities Control an End To End ProcessGovernment standardized XML linked to VAT Tax reporting = Real Time Audits

Supplier Registers XML

Government XML Standard Only Legal document Registers VAT Tax Obligation

PDF Accompanies Truck

Copy of Invoice OR Signed Shipping Document

depending on country

VAT Tax Linked to XML

Buyer only able to take VAT tax credits that are linked to approval codes in supplier XML

Errors or corrections are the buyer’s issue to get fixed

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Governments: Constantly Changing & AcceleratingFrom 3 to 10 Countries in less than 2 Years, More Business Processes Affected

2013 2014 2015-2016

AR eInvoicing

AR eInvoicing

AR eInvoicingAP eInvoicingFreight InvoicesSPED ECD

AR eInvoicingAP eInvoicingNominaeContabilidad

AR eInvoicingProforma VAT

AR eInvoicingAP eInvoicingFreight InvoicesSPED ECDSPED ECFeSocial

AR eInvoicingAP eInvoicingLibros Reports

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Solution RequirementsSimplify Complexity Today, Manage Change in the Future

Cash, Compliance & CostEfficiency & Stability

CFO

ObjectivesHow do I automate processes with

my customers and suppliers?

How do I streamline transparency of

reporting & cash flow?

Efficiency On-time delivery

Lower Inbound Receiving costs

Accurate tax reporting & IVA Credits

Complete audit trails

Cost Employee productivity

Cost and time of shutdowns

Tax penalties, missed deductions

Cost of closing books monthly

Flexibility Automated Contingency in place

Process workflows

Working capital optimization

SAP as single system of record

IT Consolidation

Chief Information Officer

How do I provide value with fewer

systems and lower costs of upgrades?

Effort build, integrate, and maintainSAP & multiple country solutions

Staff, Solutions, Infrastructure

Annual upgrades & consulting

Stable budgeting vs. fire drill projects

Buffer SAP from change

VP Supply Chain

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Multiple Solutions• Local country solutions

• Middleware interfaces

• SAP ERP updates

SAP not System of Record• Data is changed in 3rd party

tools not in SAP ERP

Who Supports?• Search & Rescue Missions

Who Maintains?• Alignment with SAP ERP –

global regression testing?

• Ongoing knowledge of what was done and what needs to be done

IT – Traditional Approach is CostlyMultiple Solutions, Constant Upgrades

SAP

ERP

Middleware

Integrate the

System

Different

Solutions for

Each Country

CUSTOMER

IDOC1

2

3

4

5

Monitor #1 Monitor #2 Monitor #3-6

Who

Supports

Who

Supports

Who

Supports

6

7

8

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IT – Financial Accuracy Equals Cash FlowVAT Remittances & Working Capital Issues

Working Capital Optimization• Accurate invoicing equates to lower DSO & less returns

• VAT tax obligations & deductions equal millions for multinationals

• Transform mandated compliance into Supply Chain Financing opportunities

Financial Reporting Accuracy - VAT

VAT obligations in Latin America – 16-22% of goods sold

Brazil VAT – based on physical movement of goods which means can owe even before you collect from your end customer

VAT Credits/Deductions must be linked to supplier’s registered XML

Finance Penalties – Local and FCPA for US Public Companies• Mexico - $3,000 per event (i.e. transaction) plus denial of deductions

• Brazil -75% to 150% of tax values - $50 Million dollar Chem business fined $3 Million by SEFAZ for deduction issues (page 30 of 10K)

• Foreign Corrupt Practices Act – SEC fines CPG company 4.2 Million of Mexico invoices issues; High Tech company FCPA issues approach $108 Million

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Supply Chain – Business Impact is SubstantialMission Critical Timing & End User Productivity

Invoicing Can Shut Down Operations

Government approved documents are needed to ship legally. Built in back up processes ensure you can always ship.

Level 1 - On Network Contingency

Level 2 – On Premise Contingency

Automatic Reconciliation to get invoice registered when systems back on line

Standardization can drive down costs

Use XML Invoice and PDF on trucks to lower cost in inbound receiving

Automated Purchase Order – Invoice matching before the truck arrives

Eliminate data entry at warehouse by scanning the PDF for data entry

Manage discrepancies and trigger government processes (return orders, gov’t status messages)

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Argentina e-Invoicing Business Process Overview

AFIP XML

Subset of Invoice Data(total amount, tax amount,

Sending party, Receiving Party)

CAE + Expiration Date

PDF or XML via Mail or electronically via FTP, email, etc.

Digital Certificate

CertifyingEntity Argentina

Vendor

AFIP

Buyer

4

2

1 5

3

Archive

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Argentina 2015

AFIP Invoicing

All B2B, B2C, and Export Invoices required

COTS – Remitto – city level integration that affects shipping

Removing “sin detail” XML from the system. Argentina is slowly moving away from invoices without line item level information

Inbound processing – web service for buyer side validation exists, expect mid-summer enforcement

Issues that many will have

Dynamic Sequencing – of invoices in Argentina are done in batch. If you send 1000 invoices and invoice #2 fails, the other 998 won’t process. Need automatic resequencing when this happens

Shipping – Type E you need the invoice on the truck and many will require Remitto based on city (i.e. Buenes Aires) to ship domestically

Ensure you have ability to do back up paper contingency automatically

Ensure you have approval code from gov’t before you post an invoice to G/L

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Invoiceware InternationalBusiness-to-Government Compliance Suite for SAP

Latin America Regional Platform

• Brazil, Mexico, Chile, Argentina, Peru, Ecuador, Uruguay & Colombia

SAP System of Record

• SAP sole system of record

• Single user interface inside SAP

Process Automation

• Automated Contingency – always be able to ship

• Lower Inbound Receiving & AP Costs

• Transactions & Reports are fully integrated

• Working Capital Optimization solutions

End to End Support

• End to End support in Portuguese, Spanish and English whether SAP issue or gov’t issues

Fixed Fee - Change Management

• All maintenance is covered by fixed cost annual fee (software & labor included)

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Resources Click the links below for more information

Learn more about Argentina requirements

Top 5 Mistakes During SAP Rollouts To Latin America

Argentina AFIP mandates checklist

Want to stay up to date on compliance in Latin America?Subscribe to our blog today.

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Next Steps Contact Us To Learn More

+ 1800 – 988 – 0728www.invoicewareint.com