If you have the responsibility for VAT determination and tax reporting in Brazil as part of your job description, you no doubt understand the levels of complexity involved in getting it right and ensuring VAT compliance.
Brazil has long been considered amongst the most difficult regions to achieve tax compliance. The country represents the most diverse landscape for VAT determination of any industrialized nation. The complexity of its fiscal rules and validations are increasing by the day, evidenced by the fact that since the Federal Constitution was enacted in 1988, nearly five million tax related laws and decrees have been issued. This is an issue that is costing businesses a disproportionate amount of time, money and resources.
Value-added tax is constantly evolving, and Brazil’s complex and rapidly evolving tax codes and regulations are making it increasingly difficult for businesses to remain compliant. Many companies are turning towards VAT tax software and automation technology to reduce the burden of managing these processes.
For a clearer explanation as to why Brazil has become so complicated and the sheer volume of VAT regulations and standards businesses are up against, we have put together this infographic, Untangling Tax Laws in Brazil is Beyond Difficult. This will help inform you as to where the Brazil market is headed and why it is so important to develop a tax strategy that is capable of keeping pace with consistent change, new VAT reporting standards and mandates and increasing demands on business to allow for stricter government oversight.
Sovos has considerable experience in providing VAT tax solutions for companies operating in Brazil. Our team of local, regulatory experts is second to none and our cloud-based tax solutions work seamlessly with existing technology platforms such as SAP.
If keeping current with changing laws in Brazil is creating an undue burden on your organization and remaining compliant with VAT tax mandates has become more a matter of hope rather than a probability, we invite you to talk to our team of experts.
We will work with you to identify your areas of greatest exposure and design a VAT tax solution that meets the needs of your operations in Brazil and also has the capability to scale to meet the needs of your organization globally.
The continued digitization of tax has made it imperative that companies keep pace with changing regulations in real-time. Falling behind is not a viable option. If your organization could benefit from another look at your tax management processes in Brazil, take the time to talk to Sovos.
Certified Service Providers (CSPs) allow businesses to outsource most sales tax administration responsibilities, making it easier to comply with the laws of a given jurisdiction.
Choosing a CSP to manage your sales tax filings reduces the burden of managing end-to-end sales tax compliance while reducing organizational liability during the tax calculation process.
Greece is introducing a tax reform to increase efficiency, prevent fraud and close its VAT gap by digitizing its tax system. Although 1 October 2020 had been the intended date for mandatory participation, late changes announced by the tax authority meant only some taxpayers were obliged to use it during 2020. The date has since been delayed by the Greek government several times and will now not be mandatory for all taxpayers (but not all transactions) until November 2021. It’s expected that it will be fully implemented in January 2022.
The new platform offers a collaborative environment where the data provided by businesses to the IAPR will not affect their own books but will also often auto-populate their trading partner’s tax records in myDATA.
Apart from the benefits of the digital tax transformation for businesses, the reform enables the Greek government to have increased visibility over business and financial data and impose audits or penalties where discrepancies arise.
All companies established in Greece that maintain their accounting records in line with the Greek Accountant Standards regardless of their size, form, or their type of accounting books are all in scope and are affected by the reform.
Central to the new reform is the IAPR’s e-books scheme, myDATA, which means my Digital Accounting and Tax Application. It requires trading partners to report a series of accounting data, captured within 17 types of documents under 52 different account classifications, to the IAPR’s digital platform. The IAPR’s digital platform has the same name as the scheme.
Pioneering Latin American countries have led the way with VAT initiatives that rely heavily on technology for compliance and reporting. This gives governments greater visibility into business transactions. Download our infographic for the 10 lessons learned from Latin America’s initiatives that can help companies in Europe prepare for tax reporting changes.
Selecting the right tax partner is key to effectively managing the complexities of modern tax environments. See the key traits that make a successful partnership.
Keeping pace with the number of regulatory updates and tax form changes has become a challenge for businesses. Just when you think you have everything figured out, along comes another complicated form.
In 2020 the IRS re-introduced Form 1099-NEC for nonemployee compensation. This change impacts organizations of every type and size. We have assembled a list of the five things you absolutely need to know about Form 1099-NEC.
Additionally, Sovos has a resource center for for Form 1099-NEC & Direct to State Reporting. Learn more.
At a time when the global VAT landscape is undergoing significant change, we teamed up with Shared Services Link to understand more about the key challenges faced by AP and VAT professionals at multinational companies and what their focus is for 2021 and beyond.
India has introduced an e-invoicing framework that requires taxpayers to transmit their invoice data to its government portal.
The Indian e-invoicing system now falls under the category of continuous transaction controls (CTCs). Invoice data must be transmitted to the governmental portal before an invoice can be issued.
As the fifth largest economy in the world, the scope of the mandate is far reaching.
For a snapshot of the key details for this mandate, including the mandate aim, scope, quick facts and key dates, download the infographic.
E-invoicing has been explicitly permitted in India since the implementation of GST Laws in the country in 2017. The e-invoicing system has been classified as a “post audit” system in which taxpayers had much freedom and few constraints on how to generate or exchange e-invoices.
However, following the global trends in indirect tax control, India recently introduced a new e-invoicing framework which envisages transmission of their invoice data in a structured JSON format to the tax authority’s portal before the invoice is made available to their buyers.
Under the new framework, the Indian e-invoicing system falls under the category of CTCs due to the invoice data reporting obligation to the government portal being a mandatory step before an invoice can be issued.
As a result of successful transmission of the JSON, the invoice registration portal (IRP) will assign a unique number for each invoice. The legal validity of the invoice is conditional of the IRP digitally signing the invoice and providing an invoice reference number (IRN). The JSON schema is only mandatory for the invoice data to be reported in the electronic format to the IRP and to receive the corresponding signed file from the IRP.
Taxpayers have the discretion of exchanging their invoices in JSON or PDF format as well as in paper form. Invoices corresponding to business-to-business, business-to-government and export transactions are in the scope of the CTC clearance invoicing system. Business-to-consumer invoices are left outside the scope of the clearance process, however additional QR code requirements exist for this document type.
The e-invoicing platform will have backend connectivity with the GSTN and e-waybill platforms. Data collected from the e-invoicing system will be recycled and used by the government portal to auto populate the ANX-1 part of the GST returns for the seller and the ANX-2 for the buyer as well as to generate e-waybills. Therefore, the e-invoicing platform will be at the core of India’s digital tax control system.
With governments around the world digitising tax, companies are now under greater pressure than ever to ensure they are audit ready, all the time.
We’ve pulled together a quick checklist for you to cross-reference to see – Is your e-archive compliant?
Because the IRS is underpaid by nearly half a trillion dollars per year, they are taking swift action to reclaim those tax dollars. This could mean steep penalties for your business if you fail to meet the latest regulations. See the infographic below for more facts about enforcement.
When does tax information reporting season end? At the end of January? Maybe in March? When 1099 forms are finally gone?
For organizations that do it right, there is no “season.” Reporting is a year-round process that emphasizes efficiency over panic and minimizes risk.
Check out the year-round reporting schedule in this infographic.
Mandated e-invoicing and tax reporting requirements in Latin America make SAP implementations in this region more complex than anywhere else in the world. Here we examine the Top 10 Hurdles to Implementing SAP in Latin America.
Despite these challenges, it’s important that compliance is managed wholly within your ERP – housing data and reports elsewhere only adds challenges that can trigger audits and fines. That’s why choosing the right compliance solution is such a critical decision.
Hurdle 1 – Consistency
Consistency between transactional invoices and accounting reports is essential. Any slight discrepancy triggers audits and fines, which is why it’s so critical to maintain compliance within SAP, despite its challenges.
Hurdle 2 – Customizations
Each country has different requirements that must be reflected in your ERP implementation. For example, Chile doesn’t allow decimal points, and in Brazil and Mexico, reporting is based on the calendar year – not your fiscal year.
Hurdle 3 – Shipping
The ability to ship is tied to the e-invoice in many countries. Proper contingency systems must be in place to ensure your business can continue to run smoothly in the event of any issues.
Hurdle 4 – Billing
Government data requirements and processes can lead to billing challenges. Many countries require specific processes for cancellations and credits, and also require certain fields and formatting.
Hurdle 5 – Receiving
Inbound receiving processes must include verification of the purchase order, invoice and materials received. However, this is an opportunity to automate processes and lower the costs of receiving – eliminating data entry with a simple scan and click process.
Hurdle 6 – Accounts Payable
The government approved output is the only invoice of record. Governments now more than ever in LATAM are driving greater controls making the data integration of AP validation data critical as the government will use the outputs and acknowledgements to determine tax liability.
Hurdle 7 – Tax Reporting
Accurate VAT reporting is a process; not something that can be solved with OSS notes. For example, Mexico’s polizas report requires each individual pay stub, expense, etc., to be tied to the journal entry – a practice not common in many accounting departments.
Hurdle 8 – Maintenance
Compliance in Latin America is highly dynamic and SAP must be the source of truth. Synchronization between compliance solutions and SAP is critical to ensure that transactions and accounts remain consistent as tax requirements evolve. Integration flexibility and solution scalability are key success factors.
Hurdle 9 – Updates
In less than two years, Latin America has seen seven new countries implement e-invoicing and reporting requirements, and these mandates affect an increasing number of business processes, meaning the updates are never done.
Hurdle 10 – Support
Many companies underestimate the support needed to maintain compliance internally, requiring up to 11 full-time staff to maintain compliance, adjust processes, verify accuracy and address any issues.
On July 1, 2017, Spain’s SII – Immediate Exchange of Information – went into effect, requiring businesses to adapt their processes and infrastructure to support this new real-time reporting mandate. Here’s a quick look at what companies with operations in Spain need to know. Starting January 2018, the SII was expanded to the Basque region and Navarra.