eReceipts 101: The What, Why, Where and How of B2C Tax Compliance

Oscar Caicedo
June 14, 2018

After initially focusing on data and automation to gain visibility and ensure tax compliance in business-to-business transactions, many governments are now extending technology into business-to-consumer trade, requiring eReceipts. So, what’s the story behind eReceipts, and why do they matter? Here’s a quick tutorial to get you up to speed.

What are eReceipts?

eReceipts are the next logical evolution in technology-enabled tax compliance being adopted in Latin America and Europe. The first phases – eFiling, eAccounting, eLedger and eInvoicing – focused primarily on business-to-business transactions. eReceipts turn the focus to consumer purchases, tracking point-of-sale transactions in real-time for tax reporting purposes.

Paradigm Shift

Why are more countries requiring eReceipts?

eReceipts are increasing in popularity among governments and businesses alike for a number of reasons. Since retail businesses often rely on cash, sales can be hard to track, which lends itself to tax evasion. Traditionally, governments didn’t have visibility into the flow of B2C transactions. However, with eReceipts, governments have real-time access to transaction-level detail. They are therefore able to maximize VAT collections on all B2C sales. eReceipts complement other technology-enabled compliance initiatives, ensuring proper tax collections and providing full lifecycle visibility into indirect tax. With eReceipts, governments gain visibility throughout the supply chain – from raw materials to final product and on to the final consumer.

Businesses also benefit from eReceipts. They drive greater efficiencies, cut down on paper costs, streamline accounting processes and provide better data records.

Where are eReceipts required?

Many countries in Latin America have implemented eReceipts. They are currently mandated in Brazil, Peru and Uruguay, and while no mandate exists in Chile, eReceipts have been widely adopted there. In fact, Chile now issues electronic VAT assessments based on collected eInvoice and eReceipt data. This helps eliminate fraud since all tax payments and credits are calculated on legally registered invoices/receipts in the government servers.

How do eReceipts work?

Brazil was an early pioneer of tracking B2C transactions, first requiring government-approved fiscal printers at every retail location and now moving to NFCe (eReceipts) to reduce the hardware and maintenance expenses of the fiscal printers. Countries throughout Latin America are now adopting Brazil’s model, which designates the final consumer on receipts for improved tracking.

In Europe, the Czech Republic is also an eReceipt model that other countries are watching closely. Every cash transaction (including cards and checks) is recorded in a central data repository managed by the tax authority, and then a unique confirmation code is immediately sent back and added to the receipt. This electronic record makes it possible for the government to recognize fraudulent activities and improve audit efficiencies.

Because of both the volume and the multitude of methods in which consumers can purchase goods, eReceipts pose a significant business challenge.

Take Action

To learn more about the constantly changing tax compliance landscape and how eReceipts could impact your business, download the white paper: The Evolution of Value-Added Tax Compliance and Reporting.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Oscar Caicedo

Share This Post

EMEA VAT & Fiscal Reporting
September 17, 2019
Why Storage of Electronic Invoices in the EU Gets Complicated Quickly

It’s very possible that US companies are breaking laws governing storage of electronic invoices in the European Union without realizing they’re putting themselves at risk for financial penalties.  The EU is an entity that, as the Brexit debate has shown, can frustrate and baffle its own citizens. In the US, the EU is frequently misunderstood. […]

Tax Information Reporting United States
September 16, 2019
6 Reasons You Should Attend the 2019 GCS Intelligent Reporting Summit

The tax information reporting event of the year is coming in October! Sovos will present the 2019 GCS Intelligent Reporting Summit in San Antonio Oct. 28-30. You can’t afford to miss it! Here’s why:  NEW! Unclaimed Property Regulations: De-mystify unclaimed property reporting and learn how to protect your company from risk you might not even […]

Tax Information Reporting United States
September 13, 2019
California AB5 Gig Economy Bill will Affect Tax Reporting, But How?

California Governor Gavin Newsom is poised to sign into law a bill that would recategorize gig economy workers such as ride-share drivers from being independent workers to full-time employees.  The bill, California AB5, could have a profound impact on tax withholding and information reporting at state levels, with other states closely monitoring California’s activity. It […]

Sales & Use Tax United States
September 12, 2019
New Sales Tax Laws Require Ecommerce Retailers to Step up Cyber Monday 2019 Preparations

5 steps ecommerce retailers should take to prepare for Cyber Monday 2019 Retailers with ecommerce channels have a lot to gain during Cyber Monday or Cyber Week in 2019. According to BlackFriday.com, Cyber Monday spending is anticipated to grow 20% this year, with consumers spending nearly $9.5 billion online. Cyber Monday also falls on December […]

EMEA IPT
September 5, 2019
Location Location Location

EU and local legislation Location of risk is one of the key criteria an insurer must identify and consider before thinking about insurance premium taxes. It’s important to understand the location of risk rules and apply them correctly to be able to settle insurance premium taxes compliantly and to the correct tax authority. Whilst location […]