Regional Approaches To e-Invoicing: A World Tour For U.S. Multinationals
By Paula Smith, Managing Director, Indirect Tax Technology Practice, KPMG LLP; Lauren Tallman, Global Invoicing
Specialist and Senior Manager, KPMG LLP; and Christiaan Van Der Valk, General Manager, Indirect Tax, Sovos
The global e-invoicing landscape resembles a patchwork quilt rather than a uniform blanket.
Each region and country has developed approaches reflecting their unique tax administration challenges, technological infrastructure, and regulatory philosophy. Understanding these regional variations is essential for multinational businesses seeking to develop effective compliance strategies.
This post, the second in a three-part series, compares approaches across Latin America, Europe, and Asia/ Middle East, highlights key characteristics of each region’s implementation, and introduces the PEPPOL framework as a potential path to standardization.
Latin America: The Pioneer Region
The story of modern e-invoicing begins in Latin America, a region where tax evasion had long undermined government revenues and fiscal stability. Countries like Brazil, Mexico, and Chile blazed the trail, creating what has become the template for government-controlled e-invoicing systems worldwide.
Key characteristics:
- Extraordinary data requirements—up to 1,800 fields in Brazil’s case
- Pre-clearance models, where tax authorities must approve invoices before goods can leave a seller’s premises
- Swift and severe enforcement, including business shutdowns for non-compliance
In Latin America, it’s not an option not to issue an electronic invoice; it’s mandatory. Tax authorities can be quick to deactivate digital stamps or certificates, which are required for e-invoicing. When this happens, businesses can’t complete transactions.
Europe: The Calculated Approach
While Latin America led with strict control models, Europe has taken a more measured approach, balancing compliance requirements with business operational needs. The recently approved VAT in the Digital Age (ViDA) initiative represents Europe’s comprehensive adoption of continuous transaction controls, but with significant differences from the Latin American model.
Key differences:
- Greater emphasis on regulating the supplier-buyer interaction itself
- Real-time reporting preferred instead of real-time clearance (pre-approval of invoices is prohibited)
- Country-specific variations despite the EU-wide framework
Notable examples include Italy’s penalties of €250-2,000 per non-compliant invoice and France’s shift to partner dematerialization platforms (PDPs) for invoice distribution starting in 2026-2027.
Asia & Middle East: The Innovation Frontier
The Asia-Pacific and Middle East regions present perhaps the most diverse range of approaches, blending elements from both Latin American and European models while introducing innovative variations.
Notable examples:
- Malaysia implements pre-clearance processes like Latin America
- India focuses on securing unique reference numbers from the tax authority based on invoice data
- Egypt introduced hardware requirements for B2B e-invoicing transactions, requiring hardware security modules or USB tokens for digital signatures
- Saudi Arabia focused on the solution itself, explicitly prohibiting default passwords and requiring various security features
This regional diversity creates significant challenges for multinational businesses. Understanding these differences is crucial for developing compliance strategies that can adapt to local requirements while maintaining global consistency.
The PEPPOL Revolution: Beyond Compliance
Beyond regional mandates, an emerging framework called PEPPOL (Pan-European Public Procurement Online) is gaining adoption across Europe and Asia as a standardized approach to business document exchange.
Unlike government-centric models, PEPPOL represents a fundamentally different philosophy using a “four-corner model” network architecture involving the seller, the buyer, and their respective access points. This creates what experts describe as “a network of networks through this interoperability scheme.”
The implications extend far beyond technical architecture, potentially transforming entire economies by democratizing access to digital business processes, particularly for small and medium-sized businesses.
While Latin America’s approach focuses primarily on tax compliance, “Electronic invoicing is really coming to promote innovation, to promote the digitalization of the tax function, to promote automation of processes” in other regions,
according to experts.
The PEPPOL revolution represents perhaps the most promising path toward eventual global standardization, offering a framework that balances government compliance needs with business process efficiency.
This post is the second of a three-part series based on insights from “What’s Going on Over There? The Global Impact of E-Invoicing Mandates on U.S. Multinationals,” a joint perspective from KPMG LLP and Sovos
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