Update: 7 May 2023 by Andrés Landerretche
Ecuador’s Internal Revenue Service (SRI) has published an updated version of its Guide for Taxpayers on Cancellation of Electronic Receipts. The guide details how to cancel electronic receipts already authorised by the tax entity.
The improved and updated version of the previous edition, which the SRI published in 2018, is part of the body’s work to gradually expand its visibility of taxpayers’ activity over taxpayers and optimise the country’s tax practices.
The functionality highlighted in the guide allows taxpayers to carry out the entire process of annulling electronic receipts, including:
The updated guide includes details of how to request cancellation of a purchase settlement – adding to other electronic vouchers which taxpayers can also cancel such as invoices, withholding vouchers, credit notes, debit notes and remittance guides.
The SRI has established that any request for cancellation from the issuer through the portal must be accepted by the same means by the taxpayer receiving the electronic receipt. They must consent to the status change from “Authorised” to “Cancelled” once the issuer has complied with the annulment process.
The ruling excludes invoices, purchase settlements and delivery notes, as the SRI will cancel them directly if there are errors or the transaction or withholding has not been effective.
Those looking to submit an annulment request must do so exclusively online. The taxpayer issuing electronic receipts and the recipient of the electronic receipt must have an access code to the online SRI portal.
An additional relevant change is an extension of the term to request a cancellation to 90 days after the date of issuance of the proof of sale, withholding or complementary document.
It is important to consider that once somebody starts the annulment process, no procedure allows for the withdrawal of the annulment. If the recipient rejects a cancellation request due to “error”, then the issuer can commence another cancellation request.
Finally, documents with the “Pending Cancellation” status have tax validity, while those in the “Cancelled” status do not.
Interested in learning more about tax compliance in Ecuador? Contact our team of experts.
Update: 21 June 2022 by Victor Duarte
Due to the economic crisis and the necessity of the government to take measures aimed at economic growth and efficient tax collection, on 29 November 2021, the Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 Pandemic was published in Ecuador’s Official Gazette. According to this law, taxpayers obliged to issue invoices must be incorporated into the electronic invoicing system within one year from the publication.
To comply with such measure, on 27 May 2022, the Internal Revenue Service (SRI) published Resolution NAC-DGERCGC22-00000024. It establishes the obligation to issue e-invoices to taxpayers who are required to issue invoices, and the obligation for these taxpayers, qualified as agents of withholding, to issue the Simplified Transactional Annex (ATS) version of withholding documents. These taxpayers will have to adopt the e-invoicing scheme.
1. Income Tax taxpayers who are obliged to invoice but not obliged to issue invoices, sales receipts, withholding and complementary documents in the electronic modality must adopt the e-invoicing scheme into their activity until 29 November 2022, at the latest.
2. Natural persons and companies that are not considered taxpayers of the Income Tax and are obliged to invoice – but not obliged to issue invoices, withholding and complementary documents in the electronic modality – must adopt the e-invoicing scheme into their activity until 29 November 2022, at the latest.
3. Taxpayers required to issue invoices, withholding and complementary documents under the electronic modality, according to numerals 1. and 2. who are qualified as withholding agents by the SRI, must implement the ATS version of withholding documents, following the technical documentation made available by the SRI, until 29 November 2022.
For purposes of the application of this resolution, the subjects obliged to invoice are all taxpayers registered in the Single Taxpayer Registry (RUC) and who must issue and deliver invoices, withholding and complementary documents according to current tax regulations.
Persons with an annual gross turnover below USD 20,000 are not in the scope of this resolution. These taxpayers are known in Ecuador as Popular Businesses (Negocios Populares).
• As of 30 November 2022, only taxpayers responsible for issuing bills of sale (notas de venta) may request authorisations, modifications or renewals for the issuance of receipts through registering machines.
• As of 30 November 2022, taxpayers required to issue invoices, retention and complementary documents in the electronic modality may request authorisations for pre-printed documents only after they have obtained the authorisation to issue electronic documents in the production environment of the e-invoicing system.
The resolution introduces a limit for invoices or receipts issued under the pre-printed modality, which may not exceed 1% of the total receipts issued in the previous fiscal year.
Pre-printed documents should only be issued in exceptional cases of contingency when, due to force majeure or fortuitous event, taxpayers authorised to issue documents under the electronic modality cannot generate them electronically.
According to this resolution, the SRI may keep a free tool available for taxpayers to generate electronic documents without prejudice to taxpayers using their computer systems. There was a significant change compared with the previous resolution, which established that the SRI will “maintain” this free tool, indicating that the maintenance of said tool is now optional for the SRI.
According to the original plan of implementation, the SRI had plans to gradually expand the e-invoice mandate for all taxpayers in the country, with more taxpayers scheduled to start issuing e-invoices from 2023 and 2024. However, with this resolution, the schedule of mandatory e-invoicing implementation has been modified. All these taxpayers must start adopting the e-invoicing system this year until 29 November 2022 at the latest.
Need help ensuring your business stays compliant with the evolving e-invoicing obligations in Ecuador? Contact us today to learn how Sovos’ solution for VAT compliance changes can help companies stay compliant in Ecuador and around the world.
E-invoicing was introduced in Peru in 2010, following the continuous transaction controls (CTC) trend in Latin American countries for a more efficient collection of consumption taxes. Since then, the government has rolled out measures to encompass a significant number of taxpayers under the country’s mandatory e-invoicing regime and advance new technical and institutional structures within its System of Electronic Emissions (SEE – Sistema de Emisión Electrónica).
June 2022 marked the final deadline for including the last group of taxpayers in the country’s e-invoicing mandate. However, the government continues to expand its system, with the latest update proposed by a draft resolution introducing important changes to the Peruvian e-transport document, the Guía de Remisión electronica – GRE.
The Peruvian tax authority (SUNAT) published on 2 June 2022 a draft resolution introducing changes to the GRE, the electronic transport document that must be issued in connection to invoices (comprobantes de pagos) for the control of goods under transportation. The GRE is only vital while the goods are in transit but is a document commonly kept by companies to maintain internal controls of transported goods.
The new draft resolution aims to regulate the issuance of the e-transport document further, introducing several changes, mainly to optimise the control of goods and eliminate the use of paper.
Among the many changes introduced by the draft, the main are:
Taxpayers must be ready to issue GREs remitente and transportista exclusively through their own systems using a software provider (PSE – proveedores de servicios electrónicos) or the SUNAT Portal. This requirement may represent quite the impact on taxpayers that regularly issue a large volume of GREs through the electronic services operator’s channel, the SEE-OSE (Operador de Servicios Electrónicos).
The most impactful change, however, is that taxpayers will only be able to use the GRE as a support document for the transport of goods. Under current legislation, besides the GRE, the factura guía and the liquidacion de compras, which are regular invoices with additional transport information, can also be used to support transporting goods. Issuance of the factura guía is a common practice since it entails the generation of one single document that serves both the sales transaction and transportation. However, the draft resolution only allows the use of the GRE for this purpose.
The introduction of the QR code is the government’s approach to a modern and efficient control method. The bidimensional code is generated by SUNAT once the CDR (constancia de recepción) acquires accepted status and may be presented in either digital or printed format.
Although taxpayers may still support transportation by providing their registration number (RUC), the series and the GRE number, it is expected that the QR code will become the principal method to support transit, and the RUC will only be used as a contingency method.
A new type of e-transport document has also been introduced. The guía de remisión por evento may only be issued through the SUNAT Portal and is used to complement a previously issued GRE in the case of unforeseeable events not attributable to the issuer. In these cases, current regulation supports the transfer with the same document. The draft resolution, however, requires that the GRE por evento is issued before restarting the transportation of goods.
Another change that taxpayers must be aware of, as it might give rise to complex scenarios, is the creation of a new catalogue of measure units applicable only to GREs, found in Annex III. The already existent measure unit catalogues for all other invoices will not apply to the GRE, which is bound to cause a lack of uniformity since the same concept would use two different catalogues.
The draft resolution sets 13 July 2022 as its date of entry into force when taxpayers already in the scope of the GRE may start to issue through the appropriate channels and voluntarily start using the QR code as the support for transportation.
However, until 30 September 2022, taxpayers may exceptionally issue GREs remitente through the SEE-OSE, considering the conditions and requirements in place before the publication of the resolution. The draft also establishes a list of certain taxpayers (issuers and transporters) who will become obliged to issue the GRE and the corresponding dates, in Annex X, according to taxpayer types and the goods in transport, starting 1 January 2023.
As this is a draft resolution, the changes only become definite with the official publication of the final version of the resolution. However, as 13 July 2022 approaches, the resolution is expected to be published in the following weeks. Therefore, taxpayers who are already under the obligation to issue GREs must be ready to comply with the new mandates within a month.
SUNAT accepts comments to the draft resolution, which can be sent via email until 16 June 2022, to the following address: RPATRICI@sunat.gob.pe.
Speak to our team if you have any questions about the latest e-invoicing requirements in Peru. Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world
Update: 5 February 2024 by Marta Sowinska
On 1 February, 2024, the Belgian Parliament approved the law implementing mandatory domestic B2B e-invoicing in the country, starting from 1 January 2026. The adopted bill can be found here.
This means that starting from 1 January, 2026 all VAT-registered taxpayers established in Belgium will be required to issue/receive structured electronic invoices. Peppol will be the default transmission method, although taxpayers will be able to use other systems provided that they meet the European Standard.
The bill is now awaiting the King’s signature and will later be published in the Official Gazette.
Update: 5 October 2023 by Marta Sowinska
Belgium’s Ministry of Finance has proposed a new plan for the introduction of a mandatory e-invoicing system in the country with a new timeline and scope.
Its previous proposal failed to reach an agreement with the Belgian federal government, but the Council of Ministers – the highest executive authority at a federal level in Belgium – approved the new preliminary draft on 29 September 2023.
The draft proposal introduces changes to the Value Added Tax Code to introduce a requirement for the issuance of structured e-invoices between taxpayers.
The main points are:
The preliminary draft legislation shall follow the standard legislative process before it becomes law and, as a next step, will be submitted for opinions to the Council of State, the High Council for the Self-Employed and SMEs, Agrofront and ITAA.
The tax authority announced that a broad information campaign will be made available to all stakeholders during the transition period. Taxpayers in scope should use this transition period and start preparing for the e-invoicing obligations to be able to comply in time for the January 2026 go-live date.
Looking for more information on the global adoption of electronic invoices? Our e-invoicing guide can help.
Update: 21 March 2023 by Marta Sowinska
On 2 March 2023, the Belgium Minister of Finance (“MoF”), Vincent Van Peteghem, announced the government’s plans for a broad tax reform. Introducing mandatory B2B e-invoicing and e-reporting is part of this tax reform. This proposal follows previous draft legislation on the issue of electronic invoicing, published in 2022, which has not yet been approved.
A phased roll-out for the B2B electronic invoicing mandate will start in July 2024. The Belgian administration has communicated the following timeline for e-invoicing issuance obligations, based on the company’s turnover:
Alongside the electronic invoicing mandate, the MoF proposes the introduction of electronic reporting obligations. According to the tax reform proposal, the new reporting obligations would allow for the elimination of the ‘customer list return’, which taxpayers are obliged to submit annually to record all sales in excess of €250 made to customers that are VAT-registered in Belgium.
The proposal for the broader tax reform is still awaiting further development, namely the publication of draft legislation detailing the invoicing and reporting requirements. Nevertheless, July 2024 looks very likely to be the date when the mandatory B2B e-invoicing roll-out will begin.
Have questions about Belgium’s e-invoicing mandate? Speak to our tax experts.
Update: 9 June 2022 by Marta Sowińska
In line with the obligations set by the European Directive 2014/55 on electronic invoicing in public procurement, Belgium introduced a mandate for public entities to receive and process electronic invoices in 2019.
For Brussels, Flanders, and Wallonia the initiative went beyond the bare minimum of the EU Directive requirements and introduced obligations to also issue e-invoices for suppliers to public sector entities in these regions.
With recent legal changes, Belgium is now preparing to extend the e-invoicing obligation to even more businesses by introducing mandatory e-invoicing in the B2B sector.
On 31 March 2022, the Belgian Official Gazette published the Royal Decree of 9 March 2022, which intends to expand the obligation to issue electronic invoices to all suppliers of public institutions in the context of public contracts and concession contracts.
As previously mentioned, such obligation was already present in multiple regions including Brussels, Flanders, and Wallonia, however, now the mandate covers suppliers of public bodies in all regions. The dates concerning issuing electronic invoices in the public contracts, based on their value are:
Only public contracts and concessions, which estimated value is less or equal to €3,000 excluding VAT are exempt.
As reported previously, Belgian authorities have indicated the ambition to move beyond B2G e-invoicing. On 11 May 2022, the Belgium Chamber of Representatives published a draft law amending the law of 2 August 2002 on combating late payment in commercial transactions, as last amended by the law of 28 May 2019, with the aim to implement electronic invoicing between private companies (B2B).
The rationale behind the proposal is the need to enable companies to invest in electronic invoicing, after already supporting the digitalization of invoicing in the B2G sector. The benefits that will follow are a much faster invoicing process, which is more secure and minimises the risk of errors and missing data.
Moreover, the chances of fraud will decrease while privacy protection increases, without the need for human intervention in the invoicing process.
Lastly, the environmental aspect concerning less paper consumption is highlighted. In terms of financial gain, as calculated by the Administrative Simplification Service (DAV), full digitalization of invoices in Belgium could reduce the administrative burden by €3.37 billion.
Based on the draft law, companies (with the exception of micro-enterprises) will be obliged to send their invoices in structured electronic form (in line with the European standard for electronic invoicing EN 16931-1:2017 and CEN/TS 16931-2:2017) as well as receive and process invoices electronically.
Nothing in the draft law describes the involvement of a centralised clearance platform, or the reporting of e-invoice data to the tax authorities. At this time, there is therefore no formal indication that the proposed mandate would be designed as a Continuous Transactions Control (CTC) e-invoicing system, however it is possible that the system will evolve to connect with PEPPOL.
The law will come into effect on 1 January 2025 regarding SMEs, thereby ensuring that companies have adequate time to prepare for the transition. If it comes to large enterprises, it is expected that mandatory e-invoicing will be present from January 2024. Originally the date concerning large taxpayers was July 2023, and small taxpayers from 2024, therefore those dates will most likely be postponed.
Get in touch about how Sovos can help with your e-invoicing compliance challenges.
Update: 26 March 2024 by Carolina Silva
The implementation of the qualified electronic signature requirement to establish the presumption of integrity and authenticity for e-invoices has been postponed, as announced in the 2024 State Budget. It had already been postponed several times in recent years.
This requirement was initially expected to be enforced on 1 January 2024. However, after the latest postponement, the eSignature requirement is now expected to be enforced from 1 January 2025.
Find out more about e-invoicing in Portugal with our dedicated overview.
Update: 19 December 2022 by Carolina Silva
The Portuguese State Secretary of Fiscal Affairs (SEAF) recently issued issued Order 8/2022 XXIII, which introduces a grace period for reporting obligations, as well as yet another of the stricter integrity and authenticity (I&A) requirements for electronic invoices.
The Order aims to highlight and promote Portugal’s plans to reduce the invoice data reporting obligations time window, as established by article 3 of Decree-law 198/2012. The Order also aims to establish the constant move towards real-time transmission of invoice data, as observed in other countries throughout the world.
Additionally, the Order affects the requirements of Decree-law 28/2019, by which the Portuguese government enacted a series of measures concerning invoice issuance, processing, and archiving, with the aim of simplifying and digitizing invoicing compliance in the country.
Since 2019, the Portuguese government has continuously reduced the time window for the invoice data reporting obligation. Starting 1 January 2023, the deadline for the monthly communication of invoice data will be until the 5th day of the month following the issuance of the invoice.
The new Order introduces a grace period concerning this obligation, with no penalties applied if reporting is carried out until the 8th day of the month following the invoice issuance. This is also applicable for cases where there is non-issuance of invoices during the relevant time period, where a nil monthly submission should also be made until the 8th day of each month.
The Portuguese government has also decided to implement a system of informative alerts by the tax authority in 2023. The aim is to promote voluntary compliance within the 5-day deadline by notifying taxpayers who don’t communicate invoice data until the 5th of the month following the issuance of the invoice.
Decree-law no. 28/2019 established several measures regarding invoicing, including a stricter integrity and authenticity requirement for invoices and fiscally relevant documents issued electronically. One of these requirements is the obligation to apply a qualified electronic signature (QES) or seal or use electronic data exchange system (EDI) for e-invoices, as per the European model.
This requirement has been postponed multiple times since enacted and was due to become mandatory on 1 January 2023. The newly published Order, however, explicitly states that until the 31 December 2023 all PDF invoices are considered electronic invoices for all fiscal effects.
Therefore, from the 1 January 2024, taxpayers must comply with the requirement of applying a QES or use EDI per the European Model to ensure integrity and authenticity of e-invoices.
Besides the stricter integrity and authenticity requirement and the grace period for communication of invoice data, taxpayers are expected to comply with new e-invoicing mandates underway in Portugal.
Namely, the mandatory B2G invoicing in the CIUS-PT format starting on 1 January 2023 for medium, small and micro enterprises. No further guidance has been issued at this time regarding a postponement of the adoption of the CIUS-PT format for these last taxpayer groups, meaning that public entities may reject invoices issued in other formats after the go-live date.
Still have questions about Portugal’s e-invoicing requirements? Speak to our tax experts.
Update 31 May 2022 by Kelly Muniz
In 2019, the Portuguese government enacted Law Decree n. 28/2019, introducing a full reform of the rules concerning the issuance, processing and archiving of invoices, with the main goals of implementing electronic invoicing, simplifying compliance for taxpayers and reducing the VAT gap.
The expanded scope of those obliged to use a billing software certified by the Portuguese Tax Authority, the inclusion of a QR code and a sequential unique number code (ATCUD – código único de documento) and the stricter integrity and authenticity requirements when issuing invoices and other relevant fiscal documents were some of the most impactful mandates introduced by this law.
However, many taxpayers struggled to comply with the new requirements. As such, the tax authority has delayed the launch of different components of the Decree, and some of them remain to be implemented.
In a recent Ministerial Decision from 26 May 2022, the goal line for implementing the stricter integrity and authenticity requirement, this article’s focal point, has been moved yet again, now to 1 January 2023.
The Decree from 2019 established that in order to guarantee the requirements of authenticity and integrity of electronic invoices and other relevant fiscal documents have been met (per article 233 of the EU VAT Directive 2006/112/EC), taxpayers must use a qualified electronic signature, a qualified electronic seal (QES) or an electronic data exchange system (EDI) with security measures per the European Model EDI Agreement. This change is important as it limits the choice of compliance methods generally recognised within the EU to one between only QES and EDI.
To achieve this goal, the Decree determined that taxpayers would only be able to use previously accepted advanced electronic signatures or seals (the lower level of signature security) until 31 December 2020. After that, all invoices would be required to incorporate a qualified signature or seal or be issued through EDI.
The original deadline for implementing the stricter integrity and authenticity requirements has been postponed many times. The first delay was ordained through Despacho n. 437/2020-XXII of 9 November 2020 of the State Secretary for Fiscal Matters (SEAF – Secretário de Estado dos Assuntos Fiscais). According to this, PDF invoices without a QES would be accepted until 31 March 2021 and considered electronic invoices for all fiscal purposes.
Since then, the mandate has been postponed four additional times, with the last one taking place on 26 May 2022, by Despacho n. 49/2022-XXIII of the SEAF. According to this act, PDF invoices with no specific security measures must be recognised as electronic invoices for fiscal effects until 31 December 2022, instead of the previously established date, 30 June 2022.
Therefore, from 1 January 2023, taxpayers covered by Law Decree n. 28/2019 must comply with the requirement to ensure authenticity and integrity either by applying a Qualified Electronic Signature/Seal or by using “EDI by-the-book” (EDI under the European Model EDI Agreement).
Besides the stricter authenticity and integrity requirement, taxpayers must be ready to comply with additional new invoicing mandates underway in Portugal. On 1 July 2022, it will be required to only use structured electronic invoices in CIUS-PT format for B2G transactions. The B2G mandatory e-invoicing is already under implementation through a phased roll-out. It is set to be finalised and become compulsory for small and medium companies and microenterprises on 1 July 2022. Furthermore, the inclusion of the ATCUD code on invoices and other fiscal relevant documents, which has also been previously postponed, is set to become mandatory on 1 January 2023.
Need to ensure compliance with the latest e-invoicing requirements in Portugal? Get in touch with Sovos’ tax experts.
Since becoming the first EU country to make electronic invoicing mandatory through a clearance process in 2019, Italy has kept a steady pace in improving its continuous transaction controls (CTC) system to close the gaps in VAT compliance.
Over recent years, Italy has gradually expanded its system by introducing various mandates. The following changes reflect the government’s efforts to tie up loose ends and assert more far-reaching control mechanisms to achieve an efficient and well-rounded system.
The changes listed below become effective on 1 July 2022, with some already available on a voluntary basis and others allowing a short grace period for adjustment.
The retirement of the tax reporting scheme, Esterometro, will require Italian taxpayers to report all cross-border transactions through the Sistema di Interscambio (SDI). Since the clearance of cross-border invoices is not within the Italian CTC system’s scope, this is a clear step towards centralisation.
Taxpayers may continue to exchange invoices in any agreed way, including the FatturaPA format. The reporting, however, must be done through the SDI using the FatturaPA format. This has been optional since January 2022.
Italy has recently expanded the scope of its e-invoicing mandate bringing in new groups of taxpayers:
A short grace period has been established from 1 July 2022 until 30 September 2022. During this period these taxpayers may issue e-invoices within the following month from when they carried out the transaction without any penalties being applied.
The new mandate also states that microenterprises with revenues or fees up to €25,000 per year will be required to issue and clear e-invoices with the SDI, but this only starts in January 2024.
Following the Italian CTC mandate, Italy and San Marino began negotiations to accommodate invoice exchange between the two countries through the more modern clearance-based system, which requires taxpayers to issue and clear e-invoices using the FatturaPA format. This was established by creating a “four-corner” model with the Italian SDI as the access point for Italian taxpayers and the HUB-SM platform as the SDI counterpart on San Marino’s side.
The mandate covers the sale of goods shipped to San Marino for taxpayers who are residents, established or identified in Italy. For sales of goods to Italy, an e-invoice must be issued by the economic operators with identification attributed to them by the Republic of San Marino. A significant effect of this mandate is that the reporting obligations through Esterometro will come to an end.
The voluntary transition phase started in October 2021.
The start of the second semester of 2022 will bring significant changes, and taxpayers have limited time to conform as July approaches. Understanding how these new requirements can affect your company will ensure compliance and avoid unnecessary mistakes.
Speak to our team if you have any questions about the latest e-invoicing requirements in Italy. Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.
Update: 30 May 2024 by Dilara İnal
Implementation of Phase 2 of Saudi Arabia’s e-invoicing initiative started in January 2023 with the first wave of taxpayers. Subsequent waves – which are announced by Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) – are based on the generated revenue subject to VAR in Saudi Arabia.
In addition to announcements on ZATCA’s website, ZATCA notifies taxpayers at least six months before the enforcement date of their new e-invoicing requirements.
Waves dictate when taxpayers of particular revenue statures are required to take part in Saudi Arabia’s e-invoicing program. The table below details the waves, revenue threshold and applicable dates for the initiative’s second phase.
| Waves | Threshold (Annual taxable revenue) | Integration date |
| Wave 1 | 3 billion Riyals (approx. USD 800m) for 2021 | 1 January 2023 |
| Wave 2 | 500m Riyals (approx. USD 133m) for 2021 | 1 July 2023 |
| Wave 3 | 250m Riyals (approx. USD 66m) in 2021 or 2022 | 1 October 2023 |
| Wave 4 | 150m Riyals (approx. USD 39m) in 2021 or 2022 | 1 November 2023 |
| Wave 5 | 100m Riyals (approx. USD 26m) in 2021 or 2022 | 1 December 2023 |
| Wave 6 | 70m Riyals (approx. USD 18m) in 2021 or 2022 | 1 January 2024 |
| Wave 7 | 50m Riyals (approx. USD 13m) in 2021 or 2022 | 1 February 2024 |
| Wave 8 | 40m Riyals (approx. USD 10m) in 2021 or 2022 | 1 March 2024 |
| Wave 9 | 30m Riyals (approx. USD 8m) in 2021 or 2022 | 1 June 2024 |
| Wave 10 | 25m Riyals (approx. USD 6m) in 2022 or 2023 | 1 October 2024 |
| Wave 11 | 15m Riyals (approx. USD 4m) in 2022 or 2023 | 1 November 2024 |
| Wave 12 | 10m Riyals (approx. USD 2.6m) in 2022 or 2023 | 1 December 2024 |
Read our overview for more information regarding Saudi Arabia’s push towards e-invoicing.
Update: 20 January 2023 by Dilara İnal
Taxpayers now have the option to start complying with the Phase 2 requirements on a voluntary basis before the integration enforcement date arrives.
Companies were previously not allowed to voluntarily start the implementation of Phase 2. ZATCA changed its approach to voluntary participation in December 2022.
Looking for further clarification on Phase 2 of Saudi Arabia’s e-invoicing system? Contact our experts now.
Update: 24 October 2022 by Dilara Inal
Phase 2 of Saudi Arabia’s e-invoicing system rollout is fast approaching. See below for details about the timeline and the requirements for the integration stage of implementation.
Implementation will begin in January 2023 and taxpayers will need to issue and submit e-invoices in a specific format.
Phase 2 is planned as a gradual implementation. The first wave of implementation covers taxpayers with an annual turnover of 3 billion riyals (approximately 800 million USD) or more for the 2021 period.
Taxpayers who are in the scope of the first wave are notified by the tax and customs authority (ZATCA) about their obligations under Phase 2 – these obligations start six months after this notification, even though the official date has been announced as 1 January 2023.
The second wave of taxpayers are businesses with revenue subject to VAT which exceed half a billion riyals during 2021. Taxpayers in this group will be notified during the first six months of 2023 and their Phase 2 obligations start six months after this notification. The second wave of Phase 2 will be implemented during the period of 1 July 2023 to 31 December 2023.
Firstly, all invoices must be issued in UBL 2.1 format. B2B invoices are subject to a CTC clearance regime, whilst B2C invoices are reported to the tax authority within 24 hours.
Under the new regime, B2B invoices can only be sent to the buyer after the tax authority’s approval which gives legal validity to invoices.
Each invoice must be generated in a single sequence and include a hash value computed from previous invoices’ elements. This hash function ensures that invoice data isn’t modified or tampered with.
Also, an invoice counter value and a globally unified identification number (UUID) must be included. The QR code is generated by ZATCA during the clearance of an invoice, and it must be shown in case B2B and B2G invoices are sent to the buyer in human-readable form. For B2C invoices, the QR Code is generated and applied by the taxpayer during issuance of the invoice. In addition, self-billing is permitted for domestic B2B transactions and the invoice must contain a statement declaring it is self-billed.
Taxpayers who are yet to be notified by ZATCA for phase 2 implementation should continue to comply with phase 1 requirements without any change.
We advise all taxpayers to follow upcoming updates to ensure they are prepared for phase 2’s complex requirements. Considering the impact of this CTC regime, other e-invoicing initiatives are expected to be implemented in the Gulf region in the near future
Still have questions about Saudi Arabia’s e-invoicing phase 2 implementation? Speak to our tax experts.
Update: 30 May 2022 by Selin Adler Ring
Saudi Arabia´s e-invoicing system is being rolled out in two phases; the second phase’s requirements differ from the first phase. The first phase started as of 4 December 2021 for all resident taxable persons. The second phase will go live on 1 January 2023, and the impacted taxpayer group has not yet been announced. However, the Zakat, Tax and Customs Authority (ZATCA) has made considerable progress in kicking off phase 2.
Phase 2 will introduce a Continuous Transaction Controls (CTC) regime in which e-invoices, electronic credit and debit notes will be transmitted to the ZATCA platform in real-time. A clearance regime is prescribed for B2B invoices, while B2C invoices must be reported to the tax authority platform within 24 hours of issuance. Therefore, ZATCA was expected to introduce its e-invoicing platform well in advance of the launch of phase 2.
As expected, the ZATCA recently announced the launch of an E-Invoicing Developer Portal (Sandbox). Users will use the Sandbox to simulate the integration with ZATCA’s platform and can access details on the APIs and other requirements through this platform upon registration.
ZATCA has proposed specific changes to e-invoicing rules. The proposed changes are under public consultation and interested parties may submit their feedback until 10 June 2022.
The changes aim to clarify some requirements (e.g. Cryptographic Stamp, hash, counter etc.) rather than introducing new ones.
The last clarifying changes to the e-invoicing rules are underway, and the developer portal has been launched. We’re now expecting ZATCA’s announcement of the taxpayer groups in the scope of the mandate and expect it to happen at least six months before the go-live date. As the ZATCA plans to roll out phase 2, there will be different timelines for different taxpayer groups. We expect this information within the coming months.
Need to ensure compliance with the latest CTC requirements in Saudi Arabia? Get in touch with Sovos’ team of tax experts.
Update: 29 February 2024 by Inês Carvalho
Since January 2023, Romania‘s mandatory e-transport system has monitored the transport of certain goods in the national territory. The e-transport system operates in parallel with Romania’s e-invoicing system.
This blog answers frequently asked questions about Romania’s e-transport system including what and who is in scope, document format and fines for non-compliance.
From January 2023, the Romanian e-transport system monitors the transport of high fiscal risk goods on the national territory.
Transportation in scope includes:
In addition to the transportation type, the categories of road vehicles in scope are as follows:
Transportation of high fiscal risk goods that don’t fall within this scope do not need to be declared in Romania’s e-transport system.
The carriage of goods intended for diplomatic missions, consular posts, international organisations, the armed forces of foreign NATO Member States or as a result of the execution of contracts, are not in the scope of the RO e-Transport system.
From December 15th, 2023, the scope of the e-transport mandate was expanded to include the international transport of all goods. Whilst the change was effective immediately, there is a grace period in place until 1 July 2024, after which, penalties will be imposed.
Romania’s National Agency for Fiscal Administration (ANAF) established a list of high fiscal risk products using the same criteria as the e-invoicing system (E-Factura), with a few differences.
The product categories of high fiscal risk products for the e-transport system are:
If the transportation includes both goods with high fiscal risk and goods outside the high fiscal risk category, transportation must be declared in the Romanian e-transport system.
Romania’s e-transport system is operational through the Virtual Private Space (SPV), the tax authority portal used for tax purposes, including the Romanian e-invoicing system. The e-transport system can be used through an API or a free application provided by the Ministry of Finance.
The entities required to report transport data in the e-transport platform are as follows:
The declarant must submit an XML format file following the official schema including the following:
Noncompliance with the e-transport system rules will result in a fine reaching RON 50,000 (approx. €10,000) for individuals and RON 100,000 (approx. €20,000) for legal persons. In addition, the value of undeclared goods will be confiscated.
Concerning the international transport of goods, other than goods falling under the ‘high fiscal risk’ category, fines will only apply from July 2024, after the established grace period ends.
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Eastern European countries are taking new steps concerning the implementation of continuous transaction controls (CTC) systems to reduce the VAT gap and combat tax fraud. This blog provides you with information on the latest developments in several Eastern European countries that may further shape the establishment of CTC systems in other European countries and beyond.
Previously announced on 1 January 2022, taxpayers have been able to issue structured invoices (e-invoices) using Poland’s National e-Invoicing System (KSeF) voluntarily, meaning electronic and paper forms are still acceptable in parallel. On 30 March 2022, the European Commission announced the derogatory decision from Article 218 and Article 232 of Directive 2006/112/EC. The decision will apply from 1 April 2023 until 31 March 2026, after receiving the last approval from the EU Council. Moreover, on 7 April 2022, the Ministry of Finance published the test version of the KSeF taxpayer application that enabled the management of authorisations issuing and receiving invoices from KSeF. The mandatory phase of the mandate is expected to begin the second quarter of 2023, 1 April 2023.
For more information see this overview about e-invoicing in Poland or VAT Compliance in Poland.
The Romanian CTC system is one of the fastest developing in Eastern Europe, with the E-Factura system being available for B2G transactions since November 2021. Based on the Government Emergency Ordinance no. 41, published in the official gazette on 11 April 2022, the use of the system will become mandatory for transporting high fiscal risk goods domestically as of July 2022.
Moreover, Draft Law on the approval of the Government Emergency Ordinance no. 120/2021 on the administration, operation, and implementation of the national e-invoicing system (Draft Law) on 20 April 2022 was published by The Romanian Chamber of Deputies. According to the Draft Law, the National Agency for Fiscal Administration (ANAF) will issue an order in 30 days following the derogation decision from EU VAT Directive and establish the scope and the timeline of the B2B e-invoicing mandate. As derived from the proposed amendments, B2G e-invoicing will become mandatory as of 1 July 2022, and mandatory e-invoicing for all B2B transactions is in the pipeline.
For more information see this overview about e-invoicing in Romania or VAT Compliance in Romania.
Serbia has introduced a CTC platform called Sistem E-Faktura (SEF) and an additional system to help taxpayers with the processing and storage of invoices called the Sistem za Upravljanje Fakturama (SUF).
To start using the CTC system Sistem E-Faktura (SEF) provided by the Serbian Ministry of Finance, a taxpayer must register through the dedicated portal: eID.gov.rs. SEF is a clearance portal for sending, receiving, capturing, processing and storing structured electronic invoices. The recipient must accept or reject an invoice within fifteen days from the day of receipt of the electronic invoice.
The CTC system became mandatory on 1 May 2022 for the B2G sector, where all suppliers in the public sector must send invoices electronically. The Serbian government must be able to receive and store them from 1 July 2022. Additionally, all taxpayers will be obliged to receive and store e-invoices, and from 1 January 2023, all taxpayers must issue B2B e-invoices.
The Slovakian government announced its CTC system called Electronic Invoice Information System (IS EFA, Informačný systém elektronickej fakturácie) in 2021 through draft legislation.
The CTC e-invoicing covers B2G, B2B and B2C transactions and will be conducted via the electronic invoicing information system (IS EFA).
The official legislation regulating the e-invoicing system has not been published yet although it is expected to be published soon. However, the Ministry of Finance has recently posted new dates concerning the implementation of the electronic solution:
The second phase will follow for B2B and B2C transactions.
Slovenia has not progressed in introducing its CTC system. Due to the national elections in April 2022, the CTC reform was not expected to gain much traction until at least the summer of 2022. Nevertheless, there are still ongoing discussions around the CTC reform, which intensified soon after the Slovenian parliamentary elections.
The fast pace of the developments happening within Eastern European countries brings challenges. The lack of clarity and last-minute changes makes it even harder for taxpayers to stay compliant in these jurisdictions.
Staying compliant with CTC changes throughout Eastern Europe is easier with help from Sovos’ team of VAT experts. Get in touch or download the 13th Annual Trends report to keep up with the changing regulatory landscape.
The global trend in the e-invoicing sphere for the past decade has shown that legislators and local tax authorities worldwide are rethinking the invoice creation process. By introducing technologically sophisticated continuous transaction control (CTC) platforms tax authorities get immediate and detailed control over VAT, which has proven a very efficient way to reduce the VAT gap.
However, many common law countries, that don’t have a VAT system, including the United States, Australia and New Zealand, haven’t followed the same path. They have stood out in international comparisons by providing little regulation in the field of e-invoicing. The reason why there is no need to have control over the invoices is the lack of a VAT tax regime. Recent developments, however, indicate that also common law countries try to spur e-invoicing, driven by the business process efficiencies rather than the need for tax control. Accordingly, the upcoming developments will be addressed in this blog, focusing on the Unites States e-invoicing pilot program and the Australian and New Zealand initiatives to promote e-invoicing.
E-invoicing has been permitted for a very long time in the United States but is still not widespread business practice. According to some sources, e-invoicing currently only amounts to 25% of all invoices exchanged in the country. With the introduction of the Business Payments Coalition (BPC) e-invoicing pilot program in cooperation with the Federal Reserve, this may be about to change.
The BPC’s e-Invoice Exchange Market Pilot aims to promote faster B2B communication and provide an opportunity for all kinds of businesses to exchange e-invoices in the US.
The pilot program is a standardised e-invoicing network across which structured e-invoices can be exchanged between counterparties using various interoperable invoicing systems to connect and exchange documents. It’s intended to drive efficiency and productivity while reducing data errors. A federated registry services model enables authorised administrators or registrars to register and onboard participants into the e-invoice exchange framework.
The e-invoice exchange framework operates similarly to the email ecosystem. Users can sign up with an email provider to send and receive emails. The provider serves as an access point to email exchanges for their users and delivers emails between them over the internet. It allows multiple registrars to register participants within the e-invoice exchange framework. This is reminiscent of the globally established PEPPOL model, which standardizes the structure of an invoice as well as provides a framework for interoperability.
The US is following the European e-invoicing model based on open interoperability functionality. It enables parties using various invoicing systems to connect and exchange documents through the e-invoicing network easily. The digitization process in the e-invoicing sphere will enable large and small organisations in the US to save resources, promote sustainability and provide business efficiency.
Similarly, to the US, the move towards e-invoicing in Australia and New Zealand is not primarily driven by tax issues but process efficiency. Neither country has any plans concerning a traditional B2B e-invoicing mandate. However, the New Zealand and Australian governments have committed to a joint approach to e-invoicing, and the first steps are ensuring that all government entities can receive e-invoices.
In Australia, all commonwealth government agencies must be able to receive PEPPOL e-invoices from 1 July 2022. Moreover, the government also seeks to boost e-invoicing in the B2B space without the traditional mandate for businesses to invoice electronically. Instead, the proposal is to implement what is referred to as Business e-Invoicing Right (BER).
Under the government’s proposal, businesses would have the right to request that their trading parties send an e-invoice over the PEPPOL network instead of traditional paper invoices. Businesses need to set up their systems to be able to receive PEPPOL e-invoices. Once a business has this capability, it would be able to exercise its ‘right’ and request other companies to send them PEPPOL e-invoices.
This reform is expected to be introduced in July 2023, by which businesses will be able to request to receive PEPPOL e-invoices only from large businesses, followed by a staged roll-out to eventually cover all businesses by 1 July 2025.
Following the Australian e-invoicing reform from July 2022 for the B2G sector, the New Zealand Government is encouraging businesses and government agencies to adopt e-invoicing. One step in this direction is the possibility for all central government agencies to be able to receive e-invoices based on PEPPOL BIS Billing 3.0 since 31 March 2022.
Outside of these B2G requirements, there are currently no published plans to move the full economy to mandatory e-invoicing.
To find out more about what we believe the future holds, download Trends 13th Edition.
Need help ensuring your business stays updated on the changes in the US, Australia and New Zealand e-invoicing systems? Get in touch with our team of experts to learn how Sovos’ solutions can help.
The Italian government has taken important steps to broaden the scope of its e-invoicing mandate, more specifically by widening the scope of taxpayers subject to electronic invoice issuance and clearance obligations, starting 1 July 2022.
On 13 April 2022, the draft Law-Decree, known as the second part of the National Recovery and Resilience Plan (Decreto Legge PNRR 2 – Piano Nazionale di Ripresa e Resilienza), was approved by the Italian Council of Ministers (Consiglio dei ministri).
The Italian government-approved National Recovery Plan is part of the European Union’s Recovery and Resilience Facility (RRF), an instrument created to assist Member States financially in recovering from the economic and social challenges raised by the Covid-19 pandemic.
The expansion of Italy’s e-invoicing mandate is one element of the government’s anti-tax evasion package and addresses, in particular, the advancement of digital transformation, one of the six pillars of the RRF.
The draft Law-Decree PNRR 2 expands the obligation to issue and clear electronic invoices through the Italian clearance platform Sistema di Intercambio (SDI) to certain VAT taxpayers exempt from the mandate thus far. This means that from 1 July 2022, the following additional taxpayers are obliged to comply with the Italian e-invoicing mandate:
The regime forfettario is available to taxpayers who fulfil specific requirements, allowing them to adopt a reduced flat-rate VAT regime of 15%, decreased to 5% for new businesses during the first five years. These taxpayers have, up until now, been exempt from the obligation to issue e-invoices and clear them through the SDI, according to Legislative Decree 127 of 5 August 2015.
Additionally, amateur sports associations and third sector entities with revenue up to EUR 65,000 who have also been exempt from the e-invoicing mandate, are included as new subjects. Starting 1 July 2022, e-invoicing will also become mandatory for them.
The mandate still excludes microenterprises with revenues or fees up to EUR 25,000 per year, which instead will be required to issue and clear e-invoices with the SDI starting in 2024.
The draft decree also established a short transitional grace period from 1 July 2022 until 30 September 2022. During this time taxpayers subject to the new mandate are allowed to issue e-invoices within the following month when the transaction was carried out, without being subject to any penalties. This gives the new subjects time to conform to the general rule stating electronic invoices must be issued within 12 days from the transaction date.
The definitive text of the decree has not yet been published in the Italian Official Gazette; only once this final step is taken will the decree formally become law, and the extended scope become binding. The start of the second semester of this year brings additional significant changes in Italy concerning the mandatory reporting of cross-border invoices through FatturaPA, also set to begin on 1 July 2022.
Need help ensuring your business stays compliant with evolving e-invoicing obligations in Italy? Contact our team of experts to learn how Sovos’ solutions for changing e-invoicing obligations can help you stay compliant.
The Philippines continues in constant advance towards implementing its continuous transaction controls (CTC) system, which consists of near real-time reporting of electronically issued invoices and receipts. On 4 April, testing began in the Electronic Invoicing System (EIS), the government’s platform, with six companies selected as pilots for this project.
The initial move toward a CTC system in the Philippines started in 2018 with the introduction of the Tax Reform for Acceleration and Inclusion Act, known as TRAIN law, which has the primary objective of simplifying the country’s tax system by making it more progressive, fair, and efficient. The project for implementing a mandatory nationwide electronic invoicing and reporting system has been developed in close collaboration with the South Korean government, considered a successful model with its comprehensive and seasoned CTC system.
Electronic invoicing and reporting are among many components set forth by the TRAIN law as part of the country’s DX Vision 2030 Digital Transformation Program. With this, the Philippines is making headway toward modernising its tax system.
The Philippines CTC system requires the issuance of invoices (B2B) and receipts (B2C) in electronic form and their near real-time reporting to the Bureau of Internal Revenue (BIR), the national tax authority. The EIS offers different possibilities in terms of submission, meaning that transmission can be done in real-time or near real-time. Documents that must be electronically issued and reported include sales invoices, receipts, and credit/debit notes.
According to the Philippines Tax Code, the following taxpayers are covered by the upcoming mandate:
However, taxpayers not covered by the obligation may opt to enroll with the EIS for e-invoice/e-receipt reporting purposes
E-invoices must be issued in JSON (JavaScript Object Notation) format and contain an electronic signature. After issuance, taxpayers can present their invoices and receipts to their customers. The tax authority´s approval is not needed to proceed. However, electronic documents must be transmitted to the EIS platform in real-time or near real-time.
The Philippines introduced somewhat unusual requirements in this period of digitization, when it comes to e-invoice archiving. The preservation period is ten years and consists of a system in which taxpayers are obliged to retain hard copies for the first five years. After this first period, hard copies are no longer required, and exclusive storage of electronic copies in an e-archive is permitted for the remaining five years.
With tests officially underway, the next phase should begin on 1 July 2022, with the go-live for 100 pilot taxpayers selected by the government, including the six initial ones. After that, the government plans to advance a phased roll-out in 2023 for all taxpayers under the system’s scope. Meanwhile, taxpayers can take advantage of this interim period to conform with the Philippines CTC reporting requirements.
Need to ensure compliance with the latest e-invoice requirements in the Philippines? Speak to our team.
Transition from voluntary to mandatory e-invoicing expected from 1 April 2023
From 1 January 2022, taxpayers have been able to issue structured invoices (e-invoices) using Poland’s National e-Invoicing System (KSeF) on a voluntary basis, meaning electronic and paper forms are still acceptable in parallel. Introduction of the KSeF system is part of the digital transformation happening in Poland following the establishment of continuous transaction control (CTC) mandates all around Europe, supporting faster and more effective identification of tax fraud.
The KSeF system enables taxpayers to issue and receive invoices electronically. It is one of the most technologically advanced tools in Europe for exchanging information on economic events. Structured invoices issued via the system are prepared in accordance with the invoice template developed by the Ministry of Finance. After issuance, the invoices are sent from the financial and accounting system via an interface (API) to the central database (KSeF). Afterwards they are available in the system and can be downloaded by the recipient.
For more information see this overview about e-invoicing in Poland or VAT Compliance in Poland.
On 5 August 2021, the Republic of Poland requested authorisation to derogate from Articles 218, 226 and 232 of the VAT Directive to be able to implement an obligation to issue electronic invoices, processed through the National e-Invoicing System (KSeF), for all transactions that require the issuance of an invoice according to Polish VAT legislation.
Subsequently, on 9 February 2022, Poland modified its request, asking for the authorisation to derogate only from Articles 218 and 232 of the VAT Directive and specified that mandatory electronic invoicing would only apply to taxable persons established in the territory of Poland.
Poland considers the introduction of a generalised obligation to issue electronic invoices would bring significant benefits in terms of combating VAT fraud and evasion while simplifying tax collection. Moreover, the implementation of the measure will accelerate the digitalization of the public sector.
As derived from Article 218 of the VAT Directive, Member States are obliged to accept all documents or messages in paper or electronic form as invoices. Poland strived to obtain a derogation from the above-mentioned Article of the VAT Directive so that only documents in electronic form could be considered as invoices by the Polish tax administration.
Additionally, based on Article 232 of the VAT Directive the use of an electronic invoice is subject to acceptance by the recipient. Therefore, the introduction of an electronic invoicing obligation in Poland requires a derogation from this Article, so that the issuer no longer has to obtain the consent of the recipient to send an invoice in a paperless format. Currently, under Article 106n of the Polish VAT law, the use of electronic invoices requires the approval of the invoice recipient, which hinders the possibility to impose mandatory electronic invoicing.
As announced by the European Commission on 30 March 2022, Poland has been granted the derogatory decision both from the Article 218 and Article 232 of Directive 2006/112/EC. The decision will apply from 1 April 2023 until 31 March 2026, after receiving the last approval from the EU Council. The mandatory phase of the mandate is expected to begin on 1 April 2023.
To allow taxpayers to issue and make electronic invoices available using KSeF, the Polish Ministry of Finance will offer several tools free of charge:
On 31 March 2022 the Ministry of Finance announced that the test version of the KSeF Taxpayer application will be made available on 7 April 2022. It will enable management of authorisations, issuing and receiving invoices from the KSeF.
With the published decision of the European Commission Poland has entered into the next implementing stage of mandatory e-invoicing. The next steps will follow after receiving the approval from the EU Council (which is now a formality and should take place within a few weeks). Subsequently, the Ministry of Finance will implement universal electronic invoicing in Poland giving adequate time for the businesses to adapt to new solutions.
Development of Sovos’ CTC solution for Poland is already well-advanced and will shortly be ready for implementation. To get ahead of the inevitable rush to comply with Poland’s CTC mandate, contact us today.
Update: 12 September 2023 by Robson Satiro de Almeida
Recent developments in Brazil indicate changes on the horizon, as the country continues to move towards a tax reform for simplification of e-invoicing obligations.
A significant reform of ancillary tax obligations is underway aiming to create a unified system for issuing tax documents. The government has long anticipated and discussed this project, but it now shows promise of becoming a reality.
The Brazilian government published Complementary Law no. 199 (Lei Complementar no. 199) in August 2023, establishing the National Statute for the Simplification of Additional Tax Obligations (the Statute). The Statute derives from Draft Law Proposal no. 178/2021 and seeks to streamline ancillary tax obligations, including filing tax returns, keeping accounting records and issuing electronic invoices.
The Statute’s primary change provides the unification of rules for issuing electronic invoices and fulfilling other ancillary obligations. There are currently more than a thousand different electronic invoice formats throughout the country, driving up business maintenance costs and resulting in adversities in company budgets.
Specifically, the Statute establishes integrated action at the Federal, State and Municipal levels to reach the following:
To achieve unified e-invoice issuance and integration of other ancillary obligations, the government will assess existing systems, legislation, special regimes, exemptions and electronic tax platforms. The next step is to standardise legislation and the respective systems used to fulfil such obligations.
As per the Statute, this integration effort aims to provide benefits such as:
The Statute also creates the National Committee for the Simplification of Ancillary Tax Obligations (CNSOA) to establish and improve the processes for simplifying tax obligations in line with a definition of a national standard process. However, the Union, States, Federal District and Municipalities may establish additional tax responsibilities related to their respective taxes, if they are aligned with the CNSOA provisions.
After formal composition of the National Committee, the Federal Executive Branch must adopt the necessary measures to allow it to carry out its activities as defined in the Statute. This is essential to start the official move towards national unification of e-invoicing processes and other ancillary obligations.
Additionally, the National Congress will still analyse and vote on certain points of the Statute that the President vetoed, which could result in further alignment or changes within the National Statute for the Simplification of Additional Tax Obligations.
Starting to prepare for eventual changes with e-invoicing in Brazil? Sovos can help.
Update: 21 March 2022 by Kelly Muniz
Brazil is, without doubt, one of the most challenging jurisdictions in the world when it comes to tax legislation. The intricate fiscal system that encompasses rules fromhttps://sovos.com/vat/tax-rules/brazil-e-invoicing/ 27 states and over 5000 municipalities has created a burden on companies, especially for cross-state and cross-municipality transactions.
Furthermore, taxpayers must carefully examine the numerous e-invoicing formats and requirements (and, sometimes, the lack of such). Therefore, hopes for tax reform in Brazil have existed for quite some time.
In recent years, several legislative initiatives towards integrating indirect taxation mandates across the country have not met successful outcomes. Meanwhile, a feasible step into bringing forth such changes may be through the unification of rules on digital compliance with tax obligations, such as VAT e-invoicing and e-reporting.
In late 2021 a draft law proposal (Projeto de Lei Complementar n. 178/2021) was initiated by the private sector. Named the National Statute for the Simplification of Ancillary Fiscal Obligations, it has been welcomed this year by the House of Representatives. Its primary purpose is to introduce a significant reform within digital tax reporting obligations by creating a unified e-invoicing system.
By establishing national fiscal cooperation, the proposal intends to reduce costs with compliance, allow information sharing among tax authorities, and create an incentive for taxpayers’ conformity across all federal, state and municipal levels.
The principal agenda of the draft law proposal is to introduce:
The most significant change is the introduction of the NFB-e (Nota Fiscal Brasil Eletronica), a national standard for e-invoicing. It entails the unification of the NF-e (Nota Fiscal Eletronica), NFS-e (Nota Fiscal de Servicos Eletronica) and NF-C (Nota Fiscal do Consumidor Eletronica) in one single document. This will cover Brazil’s VAT-like taxes, in this case, ICMS (VAT on products and certain services) and ISS (services VAT).
In practice, this means that instead of complying with numerous e-invoicing formats and mandates, according to the state and municipality of the transaction, one national digital standard will provide uniform country-wide compliance for e-invoicing. The NFB-e will cover invoicing of goods and services on state and municipal levels for B2G, B2B and B2C transactions.
The reform will drastically reduce the burden on taxpayers and expand the scope of e-invoicing to municipalities where such a mandate hasn’t been adopted yet.
It’s essential to add clearance requirements for e-invoicing in Brazil will be maintained, meaning that businesses will still need to comply with rules for real-time clearance of invoices with the tax authority.
The draft law proposal is still in early discussions and will follow to the Justice and Citizenship Constitutional Commission (CCJC) for approval and possible amendments before voting by Congress. Until then, compliance with e-invoicing rules across Brazil remains at its current challenging status.
Need to ensure compliance with the latest Brazilian e-invoicing requirements? Speak to our team or download Trends Edition 13 to keep up to date with the latest regulatory news and updates.
In the European Union, the VAT rules around supplies of goods, as well as ’traditional’ two-party supplies of services, are well-defined and established. Peer-to-peer services facilitated by a platform, however, do not always fit neatly into the categories set out under the EU VAT Directive (Council Directive 2006/112/EC). There are ambiguities around both the nature of the service provided by the platform operator, and the status, for tax purposes, of the individual service provider (i.e., a driver for a ride-sharing service, or an individual offering their property for rent on an online marketplace). This creates a unique challenge for VAT policymakers.
The EU Commission has recently opened a public consultation on VAT and the platform economy to address these issues. We have previously discussed other initiatives proposed by the Commission including a single EU VAT registration and VAT reporting and e-invoicing. This blog will discuss the underlying challenges policymakers face and the specific proposals set out in the consultation, which could significantly impact digital platform operators and users.
A threshold question for the VAT treatment of digital platforms is whether the platform merely connects individual sellers with individual customers – i.e., acts as an intermediary – or whether it actively provides a separate service to the customer. This question is significant because services rendered to a non-taxable person by an intermediary, under Article 46 of the VAT Directive, are sourced to the location of the underlying transaction.
In contrast, services provided to a non-taxable person under a taxpayer’s name are sourced either to the supplier’s location or, in certain circumstances, to the customer’s location. Whether a particular platform is acting as an intermediary can be very fact-specific and can depend, for example, on the level of control exercised by the platform over pricing or user conduct.
To further muddy the waters, there are potential ambiguities for VAT involving:
A final source of ambiguity is whether an individual service provider qualifies as a taxable person when making only occasional supplies; this could raise the question of whether said supplies would attract VAT.
These ambiguities present an obvious challenge to the consistent VAT treatment of platforms across the Member States.
As part of its public consultation on “VAT in the Digital Age”, the EU Commission has proposed several solutions to the challenges listed above. Of these, three proposals directly address the ambiguous nature of services provided via platforms:
These proposals aim to provide clear guidelines to Member States on how platform services should be categorised, and, therefore, which VAT rules should apply under the Directive. Perhaps the most direct is the “deemed supplier” proposal, which would attach VAT liability to platform operators under defined circumstances.
A “deemed supplier regime” already exists for platforms that facilitate sales of low-value goods in the EU, so it is likely the Commission will seriously consider this option. Notably, the public consultation solicited comments on three different permutations of the deemed supplier regime, differing only in the scope of services covered.
Whichever direction the EU ultimately goes in, it is clear that a significant change is on the horizon for digital platforms. Platform operators and platform users should pay close attention to these ongoing consultations in the coming months.
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The European Commission’s “VAT in the Digital Age” initiative reflects on how tax authorities can use technology to fight tax fraud and, at the same time, modernise processes to the benefit of businesses.
A public consultation was launched earlier this year, in which the Commission welcomes feedback on policy options for VAT rules and processes in a digitized economic EU. In an earlier blog post, Sovos explored the aspects of a single EU VAT registration. It’s one of the main initiatives proposed by the Commission to adapt the EU VAT framework to the digital age. Another critical issue is VAT reporting obligations and e-invoicing, discussed in this blog.
The Commission sees a need for modernising VAT reporting obligations and is considering the possibility of further extending e-invoicing. The term Digital Reporting Requirements was introduced by the Commission for any obligation to report transactional data other than the obligation to submit a VAT return, i.e. reporting transaction by transaction. This means that Digital Reporting Requirements include various types of transactional reporting requirements (e.g. VAT listing, Standard Audit File/SAF-T, real-time reporting) and mandatory e-invoicing requirements.
These measures have been implemented in various fashions in different EU Member States over the past couple of years resulting in diverse rules and requirements for VAT reporting and e-invoicing across the EU. The current Commission initiative is an opportunity for the EU to obtain harmonisation in this area. Its public consultation is asking for input as to which road to take.
The public consultation contains several policy options to consider. One would be to leave things as they currently stand with no harmonisation and the continued need for Member States to request a derogation if they wanted to introduce mandatory e-invoicing. At the other end of the scale, a further option would be to introduce full harmonisation of transactional reporting for VAT for both intra-EU and all domestic transactions.
And sitting between these extremes, are several other routes. Instead of making a harmonised solution mandatory such a solution could be simply recommended and voluntary, coupled with the removal of the need to request a derogation ahead of introducing B2B e-invoicing mandates. Another way is to have taxpayers keep all transactional data and make it available on request by the authorities. And one final option could be to adopt partial harmonisation where the VAT reporting for all intra-EU supplies is aligned and mandatory but where domestically it remains optional.
While these policy options formally remain open to public consultation until 5 May here, they must now be viewed in the light of the European Parliament resolution of 10 March 2022 with recommendations to the Commission on fair and simple taxation supporting the recovery strategy.
In its resolution, the European Parliament calls upon the Commission to take actions regarding e-invoicing and reporting, to reduce the tax gap and compliance costs. Among the measures recommended are to set up a harmonised common standard for e-invoicing across the EU without delay and establish the role of e-invoicing in real-time reporting. Furthermore, the European Parliament proposes that the Commission explore the possibility of a gradual introduction of obligatory e-invoicing by 2023, where state-operated or certified systems should administrate the invoice issuance. In both cases focus should be on a significant reduction of costs of compliance, especially for SMEs.
It remains to be seen how the Commission will manage to align the European Parliament’s recommendations with their policy options and Member States where in several cases solutions have already been implemented.
Need more information? Sovos’ VAT Managed Services can help ease your business’s VAT compliance burden. Contact our team to learn more.
In November 2021, a Draft Royal Decree was published by the Chancery of the Prime Minister of Belgium, aiming to expand the scope of the existing e-invoicing mandate for certain business to government (B2G) transactions by implementing mandatory e-invoicing for all transactions with public administrations in Belgium. This obligation was already in place for suppliers of the centralised public entities of certain regions (Brussels, Flanders, Wallonia). However, going forward, it will include all public entities in all Belgian regions.
More specifically, the roll-out for mandatory issuance of e-invoices by the suppliers of public institutions in Belgium will be carried out in the following phased approach:
As a result of the transposition of the Directive 2014/55/EU, all Belgian government bodies are already obliged to be able to receive and process e-invoices within public procurement. This new national legislation expands the Directive’s scope and mandates the issuance of e-invoices by all suppliers to the federal government.
These B2G developments are not the end of the story. They are just the beginning. The Belgian Minister of Finance, Vincent Van Peteghem, announced in October 2021 that the government intends to extend the existing B2G e-invoicing obligation to also cover B2B transactions. Nevertheless, official sources have not yet communicated formal information specifying details of the mandate and its following implementation. Rumour has it that a legislative proposal for the B2B e-invoicing mandate was going to be published during 2022 with the implementation process happening in 2023.
However, considering the European Parliament Resolution last week which strongly favours harmonised and mandatory e-invoicing in the EU, Belgium will likely hold its horses at least until the Commission produces a proposal for how to manage e-invoicing and reporting in the Union.
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On 10 March, the European Parliament (EP) adopted a Resolution to the Commission’s Action Plan on fair and simple taxation supporting the recovery strategy, which set forth 25 initiatives predominantly related to European Union Value Added Tax (EU VAT). The document includes several general considerations and recommendations to the Commission for the VAT Directive revision proposal (“VAT in the Digital Age”) for 2022.
The EP’s resolution addressed the significant challenges in the European Union (EU) VAT tax policy and placed particular attention on the simplification, modernisation and harmonisation of such rules by uniform adoption of technology tools across all Member States, including digital and e-invoicing requirements and mandates.
The updated resolution highlights a concern around the lack of sufficient support from the Council regarding the definitive VAT regime, that is, the shift from origin to destination principle, still due for implementation. In such a system, VAT will be levied at the place of destination, leaving behind the complex transitional VAT system rules.
Concerns were also raised on the complexity of the multiple tax regulations across the EU and the constraints this entails, particularly for small and medium enterprise (SME) compliance and for those vulnerable to fraud. Added to these factors are the high costs borne by businesses to conform to the multitude of legislative requirements in the different jurisdictions. The Parliament makes an urgent call for a consistent move towards a more straightforward and modern VAT system.
More specifically, the EP described the Commission’s efforts to harmonise procedural rules across the EU and encourage closer cooperation efforts among tax authorities and businesses through the EU Cooperative compliance program as of “highest importance”.
The objective of various points was to use technology as an effective means for simple and modern tax compliance. Digitization of VAT was utterly welcomed as a means for modern and simplified VAT compliance, where real-time or near real-time reporting and e-invoicing is to be utilised by Member States in a uniform and harmonised manner across EU all jurisdictions.
On the same front, recommendations were for one-time collection of data by the tax authority aligned with utmost protection and respect regarding data security legislation, and the use of artificial intelligence (AI) and various software to ensure maximum effectiveness of data usage and security. Adopting digitization requirements will enhance security, prevent and combat fraud and increase administrative cooperation among Member States.
The resolution also targeted the new Union business and taxation agenda, supporting the design of a new and single Union corporate tax rulebook, which should reflect the OECD Pillar 1 (reallocation of taxing rights) and Pillar 2 (minimum tax on corporate profit) negotiations.
These recommendations are to be followed by the European Commission’s submission of one or more legislative proposals by 2022/2023.
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Poland has been moving towards introducing the CTC framework and the system, the Krajowy System e-Faktur (KSeF), since early 2021. As of 1 January 2022, the platform has been available for taxpayers who opt to issue structured invoices through KSeF and to benefit from the introduced incentives.
As the taxpayers have been using KSeF for a while, let’s take a closer look at what has been happening and will happen in the future regarding Poland’s CTC reform.
Initially presented as a draft act by the Ministry of Finance in November 2021, the regulation on the use of KSEF was finally adopted and published in the Official Gazette on 30 December 2021 after several reiterations.
The regulation covers mainly the categories of authorisations, methods of authentication, and information required to access the structured invoices.
According to the regulation, taxpayers using KSEF are required to authenticate using one of the following methods: Qualified Electronic Signature, Qualified Electronic Seal, Trusted Signature, or Token.
A trusted signature confirms the identity assigned to a specific Polish Identification (PESEL) number. The token method can be used to grant authorisations in the KSeF once the taxpayer has been authenticated.
The Polish tax authority has published new information on its website about KSeF features including FAQs and further documentation.
The FAQs include information regarding the scope and operational side of the system, whereas the sample XML files and the information brochure shed light on the logical structure of e-invoices and mapping requirements.
Although the tax authority continues to make every effort to clarify the many aspects of the new CTC system in Poland, we still have a long way to go regarding the full implementation of KSeF.
For instance, during the public consultation of the draft act the Ministry of Finance stated taxpayers would be able to download structured invoices via API in XML or PDF format. As of today, there is no technical information available regarding the PDF generation within the system using the API. The tax authority has published the technical documentation related to the outbound process but there is still no documentation available on the inbound side.
More importantly, a decision authorising Poland to introduce special measures derogating from Articles of the EU VAT Directive is yet to be obtained from the EU Council for roll-out of the e-invoicing mandate for all B2B transactions. The current Polish VAT Act requires the buyer’s acceptance to receive structured invoices. As the Polish authorities aim to make the KSeF mandatory in 2023 an amendment of this provision is expected once the special measures have been authorized by the EU Council.
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For more information see this overview about e-invoicing in Poland, Poland SAF-T or VAT Compliance in Poland.