The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap.
While many countries have introduced their own e-invoicing mandate to digitise fiscal controls, the requirements and systems implemented by each country often fail to align with one another. This makes it complex for multinational organisations to meet their electronic invoicing obligations.
To enhance interoperability, countries across Asia and Europe are embracing Peppol, a framework established to simplify interoperability for e-invoicing and other procurement documents. But what exactly is it? This blog has all the information you need.
Peppol began in 2008 as an effort to standardise public procurement in governments across the European Union. It is a framework made up of specifications that enable cross-border electronic procurement and a method of sending invoices to customers. Peppol integrates business processes by standardising the way information is structured and exchanged.
In recent years, Peppol has expanded its remit to include APAC. Singapore was the first Asian country to establish a Peppol authority. As well as being established in Europe, it also includes Australia, Japan, Malaysia and New Zealand.
Peppol is short for Pan-European Public Procurement On-Line, as it was initially a European initiative.
While receiving e-invoices has been mandated by law for all public sector entities in the EU since April 2020, being Peppol one of the options chosen by many countries to implement such obligation, and Peppol’s name derives from its European service, the standard is now being adopted outside of the union. Malaysia and Singapore are two non-European countries that have embraced Peppol in recent years, for example.
While we have made it clear that Peppol is an EU-wide standard for exchanging electronic documents like e-invoices, that doesn’t explain how it actually works.
The European Union laid out standards for electronic invoices. These documents must meet the required specifications and, in most cases, be sent through its network. Most public sector entities in the EU are required to be able to receive such invoices, creating a uniform and universal method of invoicing B2G transactions across the region.
It’s worth noting that while the public sector is obligated to receive these invoices in some cases, they can also be sent to companies for B2B transactions. Peppol enables the efficient electronic exchange of e-invoices, purchase orders, and other business documents, whether you are a private business or a public organization.
Peppol invoices are sent to the recipient through a Peppol Access Point. This connects to the Peppol network and comes from an approved service provider, allowing businesses to electronically exchange documents with other organisations with an Access Point.
Peppol connects organisations through a network of Peppol-accredited Service Providers, removing barriers to electronic trading created by closed ‘three-corner’ networks.
To ensure that the aforementioned Access Points follow the rules and regulations set out, it has official authorities. They are also in place to “set national requirements for the design and content of Peppol documents,” according to PEPPOL itself.
There are currently 17 Peppol Authorities in place, all of which are national bodies – bar one. OpenPeppol is the only authority which is not attached to a country as it serves as the official Peppol Authority in jurisdictions where no authority exists.
Its widespread implementation makes it an appealing option for many. Considering the variety of approaches to electronic invoicing across countries, the appeal to Peppol is the standardisation and interoperability of global electronic document exchange.
Having a collection of common standards for transferring electronic documents for every country an organisation conducts business in makes the process simpler – thus reducing the possibility of errors.
Standardising the way information is structured and exchanged makes it more secure. As well as invoices and purchase orders, Peppol has the potential to automate the exchange of any kind of business document, between any organisation, anywhere in the world.
Peppol currently has 37 member countries, 29 of which of which are in Europe.
Outside of Europe, countries that have implemented Peppol standards include:
Corner models are frameworks for digital transactions. There are multiple approaches, though Peppol’s base framework is the 4-corner model
Now considered an old model, the 3-corner model for e-invoicing required senders and receivers to connect through a single service provider. Buyers would often decide on which service provider they use, meaning suppliers had to use multiple systems across their customers.
An upgrade to the previous approach, the 4-corner e-invoicing model connects four entities. The four corners are:
The introduction of Access Points secures transactions by ensuring that communication of documents is sent and received correctly, using document validation, Know Your Customer (KYC) procedures and more.
As seen in Singapore, Peppol also has a 5-corner model. This approach adds another corner to the traditional model, being the Tax Authority/Government central platform. This framework is also known as Peppol CTC.
The 5-corner model allows tax authorities to receive almost real-time access to invoices, ensuring that tax information is transferred correctly.
At the discretion of the applicable government, the central platform can either validate documents before they are sent to the recipient or allow certified service providers to validate them instead, serving as a repository for the electronic invoices.
This pilot project established by OpenPeppol demonstrates that the network and e-invoicing specifications can also be used to meet the digital reporting requirements of the EU’s VIDA proposal.
The project is open to EU Tax Authorities/Administrations, Service Providers and end users.
Sovos is participating in this pilot project. We are a respected member, serving as a provider in both Malaysia and Singapore.
Learn more about the adoption of electronic invoicing and its many rules and regulations in our E-invoicing Guide. For help complying with e-invoicing requirements and other tax considerations, consider our Compliance Cloud solution.
The Portuguese government has been working on introducing mandatory B2G (Business-to-Government) electronic invoicing in recent years, alongside other obligations for the digitization of VAT compliance in the country.
This aligns with the European Union’s efforts towards harmonising the adoption of e-invoicing in public procurement. To achieve this goal, the EU has implemented Directive 2014/55/EU to outline the responsibilities and criteria for e-invoicing in public procurement processes. The EU requires Member States to enforce an obligation for the Public Administration to receive invoices electronically.
However, several Member States, such as Portugal, have taken a step forward by making the issuance of electronic invoices mandatory for suppliers of the Public Administration. The Portuguese mandate, known as “Electronic Invoicing to the Public Administration” (Fatura Eletrónica à Administração Pública – FEAP), was introduced to streamline invoicing processes and improve efficiency in transactions between businesses and the public sector.
In Portugal, Law Decree 111-B/2017 and subsequent amendments established the beginning of the obligation to issue, receive and process electronic invoices in public procurement. ESPAP (Entidade de Serviços Partilhados da Administração Pública) is the Portuguese entity responsible for the implementation and management of B2G e-invoicing.
This obligation is also present in the Public Contracts Code and requires suppliers of the Public Administration to issue all invoices to public sector entities in electronic format. This excluded contracts declared secret or accompanied by special security measures and contracts concluded following the simplified direct award process (contracts below EUR 5,000).
The implementation of this regime was gradual, starting with the mandatory receipt of electronic invoices by the Public Administration in April 2019. This was followed by a phased introduction of compulsory issuance of e-invoices for suppliers of the Public Administration, starting with large companies in January 2021. The implementation calendar has been postponed several times for small, medium and microenterprises. Currently, only large companies are required to issue invoices electronically.
An e-invoice, according to the EU Directive on e-invoicing in public procurement, is an invoice issued, transmitted and received in a structured electronic format.
Electronic invoicing requires data creation in a structured format and its transmission from the seller’s system to the buyer’s system in an automated manner. As a result, the invoice can be automatically imported into the public entity’s system.
As per Portuguese regulations, the e-invoicing model to be adopted is the semantic data model proposed for the Portuguese standard known as CIUS-PT. There is no obligation to send a PDF document attached to the electronic invoice. An invoice in PDF format is not considered an electronic invoice as they do not comply with European standards.
Suppliers must also archive electronic invoices and ensure they are accessible for the period required by the tax authority, which is typically 10 years.
Considering the general obligation to issue e-invoices in the B2G sector, it is possible to identify four main legal consequences for non-compliance with this legal obligation:
All public administration entities are currently obligated to receive e-invoices in the structured CIUS-PT format. Additionally, all large company suppliers to the public administration must issue e-invoices in the same format.
Once again, the obligation for small, medium and microenterprises was postponed in 2025 and is now poised to enter into force on 1 January 2026.
Until then, micro, small and medium-sized companies can use invoicing mechanisms other than e-invoicing in the structured CIUS-PT schema when contracting with the Public Administration.
Need more information on B2G e-invoicing in Portugal? Speak with our expert team.
Canada’s Border Services Agency (CBSA) has introduced CARM, a new process to modernise and digitalize import of goods in Canada.
The agency’s vision is to deliver a globally leading customs experience that facilitates legitimate trade, improves compliance and revenue collection and contributes to securing Canadian Borders.
CARM, which stands for CBSA Assessment and Revenue Management, is a mandatory multi-year initiative. CARM aims to simplify, modernise and streamline the importing process via the new web portal known as CARM Client Portal (CCP).
The agency will launch all functionalities of the CARM project in a phased roll-out of two releases. The first release has been live since May 2021, and the second will be live on 2 October 2023.
CARM will impact all importers, both resident and non-resident businesses, who import goods into Canada.
CARM is already available for voluntary registration to importers, customs brokers and trade consultants.
From the second release of CARM on 2 October 2023, all importers must register for the online CCP to continue importing goods into Canada. Otherwise, it will impede the importation of goods.
The critical element of CARM is that it consists of electronically communicating information regarding importing goods in Canada to the CBSA. It includes many changes to digitalize the communication process.
The most significant change is introducing a new customs form and abolishing previous forms in paper format. CARM will no longer accept current B2 (request for adjustments) and B3 (customs coding form) forms in a paper format.
The process will replace the forms with the new commercial accounting declaration (CAD).
B2 and B3 forms have been mandatory since 2013. They account for goods imported into Canada by reporting information about the value, classification, country of origin, tariff treatment and exchange rate of imported goods.
The submission of the new digital CAD will automate the customs process as the CARM system will automatically calculate the duties and taxes. The CAD form will enter into effect with the second release of CARM.
With the second release of CARM, the methods available for the electronic submission of the CAD are:
From 2 October 2023, every company that imports goods into Canada must register in the online CARM Client Portal (CCP). Any delay or failure to comply could impede the company’s importation of goods and its supply chain. Do you need help or further information? Just get in touch with one of our experts.
Update: 8 March 2023
South Korea has recently approved a tax reform which introduces several measures for 2023, among which is the possibility of issuance of self-billing tax invoices.
This tax reform amends the current VAT law to allow the purchaser to issue invoices for the supply of goods and services.
However, this will only be allowed in specific circumstances, such as when the supplier cannot issue the invoice. The purchaser can claim a deduction for the related input VAT by issuing a self-billing invoice.
Therefore, issuing self-billing invoices for VAT-exempted supplies of goods and services will not be permitted. However, the issuance of self-billing invoices by the purchaser depends on confirmation from a district tax office.
This amendment will enter into force and apply to all supplies of goods and services from 1 July 2023.
This South Korean tax reform will expand the transactional scope of the country’s e-invoice issuance and continuous transaction control (CTC) reporting system (e-tax invoicing), as the transactions in the scope of e-tax invoicing are generally the same as those in the scope of VAT invoicing.
Interested in learning more about e-invoicing in South Korea? Contact a member of our expert team today.
Update: 17 January 2021 by Selin Adler Ring
Collection of real-time fiscal data is becoming one of the core public finance decision making tools. Transactional data provides a timely and reliable overview of the business sector, enabling governments to rely on analytical data in the decision-making process.
This is what has led many governments to adopt CTC regimes that require taxpayers to transmit their transactional data in real/ near-real time to government services. South Korea was one of the first countries to appreciate the benefits of a CTC regime and mandated reporting of e-invoice data to the government for certain taxpayers as early as 2011.
The year after the first implementation, the South Korean authorities expanded the mandate scope and the e-invoicing system became mandatory for more taxpayers. 2014 saw another expansion of the CTC mandate to reach its current scope.
The current system requires any business that is a corporate entity or an individual whose aggregate supply value for the immediately preceding tax year is KRW 300,000,000 or more to issue an e-invoice to the recipient of goods or services subject to VAT, as well as to report the invoice data to the government.
The South Korean e-invoicing system mandates the issuance of an e-invoice to the recipient and reporting of this invoice data to the government portal within a day of its issuance. Before e-invoices are transmitted, suppliers must digitally sign them with a PKI electronic signature. E-invoices are reported in an XML format to the National Tax Agency (NTS) Portal. Due to the near-real time reporting time-limit, the South Korean e-invoicing system falls under the category of CTC.
South Korea has implemented a comprehensive e-invoicing system from the beginning and as a result there haven’t been any major changes to the requirements or practices. This is a big relief for taxpayers in South Korea compared to other CTC jurisdictions where there are constant changes.
In addition to the benefits for taxpayers, a considered CTC regime is also less burdensome for the state as the implementation costs of the constant regulatory changes can be significant.
More and more governments are considering the adoption of CTC regimes and should look to South Korea as a success story for this approach which has worked well for both the government and taxpayers.
Please get in touch to discuss how Sovos can help your business comply with CTC regime reporting in South Korea or other jurisdictions subject to e-invoicing mandates.
Thailand has permitted e-invoicing since 2012. From 2017 – following regulations issued on e-tax and e-receipts – taxpayers may prepare, deliver, and keep their invoices and receipts electronically, subject to prior approval from the Thai Revenue Department.
Currently, the Revenue Department and the Electronic Transactions Development Agency (ETDA) are working together to improve the e-tax invoicing system in Thailand. As a result of this joint effort, they’re developing new regulations.
Thailand´s voluntary e-invoicing system aims to promote and support their e-payment policies and electronic transactions, reduce the cost and management of the government and private sector and increase confidence and safety according to international standards.
According to the Revenue Code documents that can be voluntarily issued electronically are tax invoices (known as e-tax invoices), credit notes, debit notes and receipts.
E-tax invoices are electronic tax invoices, including regular invoices and debit and credit notes prepared in a specific electronic format.
Formats may include a Microsoft Word file, a Microsoft Excel file, PDF, PDF/A-3, XML or other forms established by the Revenue Department. Finally, the e-tax invoice must be signed using a digital signature or time stamp before being delivered to the buyer.
Thailand currently has two e-invoicing systems for taxpayers to adopt voluntarily. These are e-tax invoices and e-receipt RTIR, and e-tax invoices by email.
Any taxpayer can voluntarily register for this system without a turnover threshold.
Entrepreneurs can prepare electronic tax invoices and electronic receipts in an XML file or other electronic formats with a digital signature. However, to submit the data to the Revenue Department, the information should only be in an XML file format (Bor Thor. 3-2560). They must also have an electronic certificate provided by a Certification Authority.
In this system, the supplier must submit the e-invoice to the Revenue Department by the 15th day of the subsequent tax month after delivering it to the buyer.
This system is designed for small entities with an annual turnover of less than THB 30 million. Taxpayers can email the invoice to the buyer and include the central system of the agency that develops electronic transactions in the CC field for time stamping.
The system then sends both trading parties an e-tax invoice with a time stamp. In this system, the file format is PDF/A-3. Information is automatically sent to the Revenue Department.
It’s important to note that once approved by the Thai Revenue Department to issue electronic invoices, taxpayers must comply with all the regulations and rules for preparing and storing electronic invoices and receipts.
The Thai Revenue Department has recently published new announcements from the Director-General of the Revenue Department regarding VAT, namely: no. 48, 247, 248 and 249.
E-tax invoices and credit and debit notes should include specific statements from those announcements. As of January 2023, they must specify that electronic invoices were prepared and sent to the Revenue Department electronically.
The Thai Revenue Department also set forward new standards in the Announcement of the Director-General of the Revenue Department No.48 regarding forms, method of delivery, storage and documentary evidence or books and information security for operations relating to electronic invoicing.
These new standards entered into force on 19 August 2022.
This regulation reinforces the need for prior approval and permission from the Revenue Department to connect with the electronic systems to issue e-tax invoices. It is subject to the requirement that a data security system can ensure the fulfilment of e-tax invoices and e-receipts.
The taxpayers opting for e-invoicing must follow the rules and conditions for this process. They need to inform the Revenue Department of the e-tax invoice by submitting a receipt for the tax invoice and the certificate used for digital signature.
The Thai Revenue Department also issued new standards in Announcement No. 48 for storing and archiving e-tax invoices and e-receipts.
Taxpayers who are obligated to issue an invoice and choose to do so electronically have to keep the electronic invoice or receipt according to specific criteria:
(a) Use reliable methods to maintain message integrity from the time the message is completed and can display that message later.
(b) Keep information on tax invoices or receipts, which can be accessed and reused, and the meaning does not change.
(c) Keep the information of tax invoices or receipts in the format in which they were created, sent, or received – or in a form that can display messages correctly, and
(d) Retain information indicating the origin and destination of the tax invoice or receipt and the date and time they sent the message.
According to the Thai Revenue Code, electronic invoices must be stored electronically for no less than five years but no more than seven years. Taxpayers must keep tax audit e-invoices until the completion of the audit.
These were significant steps towards the digitalisation of taxation in Thailand. Although there is no future timeline or mandate, they’ve taken more measures to solidify and mature the e-invoicing mandate.
While e-invoicing is still not mandatory in Thailand, the government intends to promote e-tax invoices to help businesses to increase efficiency and decrease costs. These measures could be applicable in a future compulsory e-invoicing mandate.
If you want to learn more about e-tax in Thailand or have any other question please feel free to get in touch with a tax expert today.