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.

What is CARM?

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.

Who does CARM impact?

CARM will impact all importers, both resident and non-resident businesses, who import goods into Canada.

Is CARM mandatory?

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.

Fundamental changes introduced through CARM

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:

  1. CARM Client Portal: Importers can access the CARM Client Portal to submit the CAD form by visiting the CBSA website.
  2. Webservice: Importers can submit the CAD form via an application programming interface (API).
  3. Electronic data interchange (EDI): Many brokers use this method to transmit information for their clients (importers).

Next steps for CARM

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.

Argentina has recently expanded its perception VAT (Value Added Tax) collection regime to ensure efficient tax administration. It has included selling food and other products for human consumption, beverages, personal hygiene, and cleaning items under its scope.

The Argentinian Federal Administration of Public Revenue (AFIP) established this through Resolution No. 5329/2023 in early February 2023.

The new resolution aims to further expand the regime known as “Régimen de Percepción del Impuesto al Valor Agregado” to the categories related to food and other products for human consumption, beverages, personal hygiene, and cleaning items.

Taxpayers who issue invoices concerning these provisions must ensure compliance with the document data requirements, used as evidence of the collection for the final VAT calculation. This will be further discussed in this article.

Scope of the VAT Collection Regime

The VAT Collection Regime in Argentina is a scheme by which the seller, designated as “Collection Agent”, charges the buyer an amount additional to the sale price. As a result, the supplier will charge the fee on top of the purchase value, which includes the price and the VAT.

This new regime obliges VAT-taxable persons to act as collection agents when selling food products for human consumption, beverages, personal hygiene and cleaning items. A few exceptions include meats, fruits and bread made exclusively from wheat flour, among others. Taxable people registered for VAT purposes will also be subject to this regime when acquiring said products.

Applicable rates

 The collection regime will only apply when each transaction amount exceeds ARS 3000.

The fee amount is determined by applying 3% to the net price of the operation resulting from the invoice or equivalent document.

This percentage will be 1.50% in the case of operations taxed with a rate equivalent to 50% of the general VAT tax rate.

Reporting and invoices as proof of perception

The information and payment of the perceptions carried out under this regime will be reported through the Withholding Control System (SICORE), using code 602.

The resolution also establishes that the only valid document to prove the payment of the perceptions will be the invoice or equivalent document (issued under the current invoicing regulations). The document will record the amount received in a discriminated manner and with express mention of this regime.

Those taxable persons using “Fiscal Controllers” documents of “New Technology” to comply with the provisions of the preceding paragraph must use the section “Other Taxes” on the document.

 Implementation date

The collection regime will be applicable for taxable events perfected as of 1 April 2023. As a result, sellers of food and other products for human consumption, beverages, personal hygiene and cleaning items will charge the buyer an additional 3% or 1.5% as appropriate on the sale price according to the applicable fee.

Need to ensure VAT compliance in Argentina? Get in touch with our tax experts.

On 10 February 2023, the Italian Tax Authority introduced the possibility for 2.4 million professionals and companies to view and download the pre-filled Annual VAT declaration related to transactions carried out in 2022.

This return must be submitted by 2 May 2023.

Who does this impact?

The service is available for taxpayers defined by the provisions of announcement no. 183994 of 8 July 2021 and announcement no. 9652/2023 of 12 January 2023.

These are taxable residents established in Italy who carry out quarterly VAT payments. Exclusions include those operating in sectors of activity or for which special regimes are provided for VAT purposes, including:

This service is not available for companies established outside of Italy that are registered for VAT in Italy through direct registration or a fiscal representative.

What does it mean for the taxpayers impacted?

The Italian Tax Authority prepared the pre-filled draft thanks to the following data:

  1. Pre-filled VAT registers
  2. Daily fees transmitted electronically
  3. The Annual VAT return related to 2021 (for example, in case there is a VAT credit carried forward to 2022)
  4. Other information in the Italian Tax Authority’s database (for example, payments with F24 Forms)

How can I view the declaration?

Taxpayers can access this new functionality by entering their credentials in the ‘Invoices and fees’ (‘Fatture e corrispettivi’) portal of the Italian Tax Authority. They must access the section dedicated to pre-filled VAT documents where the new “Annual VAT return” section is present.

Can the pre-filled return be amended?

Pre-filled returns were made available on 15 February. Since then, taxpayers have been allowed to modify the pre-filled draft, integrate it and proceed with the submission.

Additional benefits

Taxpayers using the aforementioned portal will be allowed to:

  1. Calculate and pay the VAT due concerning the Annual VAT return of 2022 (that is due by 16 March 2023)
  2. Submit a correction of the Annual VAT Return, before 2 May 2023. (If needed, penalties should not apply)
  3. Submit a supplementary declaration of the Annual VAT Return, after 3 May 2023. (If required, penalties might apply)

Do I have to perform a cross check with the pre-filled Annual VAT Return?

Taxpayers should cross check the data in the pre-filled Annual VAT Return and the data in their management systems and edit the return accordingly before accepting and submitting.

More Questions? Ask our experts

If you have more questions about the pre-filled Italian annual VAT return or need support with tax compliance in Italy talk to our experts.

Update: 2 November 2023 by Dilara İnal

Israel Extends CTC Implementation Timeline

On 23 October 2023, the Israeli Tax Authority (ITA) announced that it had extended the continuous transaction controls (CTC) implementation timeline to offer businesses more time to complete their technological development. According to the announcement, the ITA will allow the deduction of input tax from a tax invoice, even in the absence of an allocation number, until 31 March 2024.

The new Israeli invoicing framework will require businesses engaged in B2B transactions that exceed a specific threshold to obtain an allocation number. The first phase starts on 1 January 2024 for invoices exceeding 25,000 NIS. Businesses must ensure that their invoices include the allocation number to be eligible for input VAT deduction as of this date. In light of this recent announcement, buyers will receive an additional three-month period to comply.

It is important to emphasise that although the ITA has extended the time for input tax deductions, the clearance platform will be fully operational as originally planned from 1 January 2024. From this date, invoice issuers who will request allocation numbers will receive them.

Looking for more information on Israel’s invoicing developments? Find out more.

 

Update: 6 July 2023 by Enis Gencer

Israel Announces CTC Implementation Timeline and Guidelines

The Israel Tax Authority has released a set of guidelines encompassing technical details and other relevant information regarding the implementation of the Israeli Invoice model.

The guidelines state the new model will be a phased implementation that begins with a pilot program in 2024. A key objective of this new model is to address and mitigate the long-standing issue of fictitious invoices in Israel.

Israel invoicing model

Under the newly introduced Israeli Invoice model, taxpayers involved in B2B transactions which exceed a specific threshold will be required to obtain an invoice number. This will be done by contacting the designated tax authority service via APIs and sending the invoice information prescribed by the tax authority.

The guidelines define the set of information that must be reported to the tax authority, including:

Once acquired, the invoice number must be included on the tax invoice. Without this number, taxpayers will not be eligible to deduct input VAT. It is important to note that the tax authority reserves the right to not assign the invoice number if there is reasonable suspicion of any legal inconsistencies concerning the invoice.

Buyers can use the invoice number to access invoice details through the tax authority service. This feature is designed to optimise the process of incorporating the invoice into the taxpayer’s accounting system.

Implementation phases

The Israeli Invoice model will be a phased implementation, beginning with a pilot program in January 2024 for invoices exceeding 25,000 NIS (approximately 6,500 euros). During this phase, the tax authority can only reject the request for invoice numbers in cases of technical errors.

As implementation progresses, the threshold will be gradually reduced as follows:

Israel is quickly taking steps towards the introducton of its invoicing system by publishing technical details and its implementation timeline soon after introducing the system formally in February 2023. Taxpayers should now prepare their systems according to the legal and technical guidelines that the tax authority has recently published.

Looking for more information on Israel’s upcoming regulations? Contact our team of experts.

Israel: Progress on Implementing Continuous Transaction Controls (CTCs)

Update: 26 May by Enis Gencer

More details have emerged regarding the implementation of the continuous transaction control (CTC) model in Israel, which was announced to be introduced in the country in February 2023.

As we reported earlier, Israel’s government approved the 2023-2024 budget on 24 February 2023, setting the stage for the adoption of the CTC model. Since then, the proposal has gone through the standard legislative process and it has recently received approval from the Finance Committee, with some modifications.

New scope and timeline of CTC system

According to the latest announcement, the modified plan introduces a CTC e-invoice clearance model for invoices exceeding NIS 25,000 (approximately 6,500 Euros) in business-to-business (B2B) transactions. Under this model, invoices must be issued through the tax authority’s system and obtain real-time approval. Taxpayers will not be allowed to use unvalidated invoices for deducting input tax.

The implementation of the CTC e-invoicing model is scheduled to start in January 2024, and by 2028, the threshold will be reduced to NIS 5,000, thus covering smaller amount transactions.

Despite the short implementation timeline, it is important that the authorities publish regulatory and technical specifications in time for taxpayers to prepare their invoicing systems to fully comply with the new requirements by January 2024.

Find more information about Israel’s current e-invoicing system here.

 

Update: 14 March 2023 by Enis Gencer

Israel Closer to Introducing Continuous Transaction Control (CTC) in Tax System

Israel’s government approved the 2023-2024 budget on 24 February 2023 to introduce a continuous transaction control (CTC) model in its tax system.

This long-awaited move will have significant implications for businesses operating within the country. It is essential to know the changes that may impact your company.

Proposal for e-invoice clearance model

The new plan, prepared by the Ministry of Finance and approved by the government, envisages an e-invoice clearance model for invoices over NIS 5,000 (appx. 1300 Euros) issued between businesses. Under this model, invoices must be issued through a tax authority system and receive real-time approval.

The tax authority system will issue a unique number as proof of clearance for each invoice, which businesses can then use to deduct input VAT. The government has also proposed that the tax authority be entitled to refuse a request to assign a number and not clear the invoice if there is a reasonable doubt that the invoice is not issued legally.

While this plan is an exciting development, it is only the beginning of a long journey towards implementing a CTC model. The above proposal is currently only outlined in a budget document, which will be subject to further readings and approvals before the government can implement it.

Additionally, an amendment to VAT Law and the publication of technical details will be necessary to make it legally and technically enforceable.

For further information on the digitization of tax in Israel, speak to a member of our team.

 

Update: 9 April 2020 by Joanna Hysi

Israel on the Road to Continuous Transaction Controls (CTCs)

With the long-lasting problem of fictitious invoices in Israel, a move towards some form of mandatory e-invoice clearance might be the answer. After having been withdrawn once due to failing support, the idea of a continuous transaction control (CTC) model is being revived by the Israeli tax authority. The proposed model, similar to Chile’s e-invoicing system (clearance), would include a direct connection between the tax authority and businesses in real time for each transaction. The proposal, which is currently being reviewed with interested stakeholders, will be presented to the Knesset Finance Committee, with the hope of promoting legislation for implementing the planned reform measures as soon as a new government is formed.

Subject to final adoption in law, the core points of the reform are:

It’s an interesting observation that for years Israel appeared to be heading towards the EU approach of a post-audit system, yet recently they seem to have pivoted and be heading towards the more Latin American style of continuous transaction controls.

Either way, the Israeli tax authorities are now taking firm measures to combat VAT fraud, as to whether they go for a model similar to Chile, or something close to home in India or Turkey, we will have to wait and see.

Many countries have recently started their continuous transaction controls (CTC) journey by introducing mandatory e-invoicing or e-reporting systems. We see more of this trend in the European Union as the recent reports on the VAT in the Digital Age Initiative discuss that the best policy choice would be to introduce an EU-wide CTC e-invoicing system covering both intra-EU and domestic transactions.

However, the efforts to fight tax fraud aren’t limited to mandatory e-invoicing or e-reporting systems. Many governments prefer to look beyond and introduce another tool that gives them greater insight into their economy: e-transport documents. When introducing e-transport systems, we see that one country differs from other EU Member States with the early adoption of an e-transport system – Hungary.

Hungarian E-Transport System: EKAER

The Electronic Public Road Transportation Control System or Elektronikus Közúti Áruforgalom Ellenőrző Rendszer (EKAER) has been in place in Hungary since 2015. Operated by the Hungarian tax authority, the EKAER is intended to monitor compliance with tax obligations arising from the transportation of goods on public roads in the national territory.

The system was initially introduced to monitor the movement of all goods in the national territory. However, after several letters from the EU Commission asking Hungary to bring their system in line with the EU regulations, the scope of the system was narrowed down to the so-called risky products in January 2021. The risky products are defined in 51/2014. (XII. 31.) NGM decree, which consists of foodstuffs or other risky products (such as flowers, all kinds of natural sands, different types of minerals, etc.).

According to 13/2020. (XII. 23.) decree on the operation of the Electronic Road Traffic Control System, Hungarian taxpayers are required to report specific data regarding the transport of risky products by using the EKAER system before the transportation of goods begins. It’s also important to mention that it’s necessary to be registered in the EKAER system and provide a risk guarantee for certain types of transport unless there is an exemption in the law.

EKAER number generation

Taxpayers are obliged to report the transport of risky goods in XML format to the EKAER system. This information includes data regarding the sender, the recipient, and the goods. Moreover, businesses must also report additional specified data to the tax authority based on the transport type (domestic, intra-community acquisitions and intra-community supplies).

Following the report by the taxpayer, the EKAER system generates an EKAER number, an identification number assigned to a product unit. This number will be valid for 15 days; therefore, the delivery of goods must be performed within this period. Businesses must communicate the EKAER number to the carrier, and it should accompany transported goods.

What’s next?

Although no future changes are foreseen for the EKAER system, different countries worldwide continue to introduce e-transport requirements similar to the EKAER system. Taxpayers must ensure that their transport processes are flexible and compatible with changes that the tax authorities are introducing to stay compliant.

On 30 August 2022, the Ministry of Finance published draft legislation amending the Regulation on the use of the National e-Invoice System (KSeF). The purpose of the draft amendment is to adapt KSeF’s terms of use to the specific conditions that apply to the local government units and the VAT groups that will operate as a new type of VAT taxpayer from 1 January 2023.

The current regulatory status in Poland

The concept of VAT groups was introduced in Poland in October 2021. VAT groups are a legal form of cooperation, a type of taxable entity that exists solely for VAT purposes. On joining a VAT group, a group member becomes part of a new separate VAT taxpayer possessing one Polish tax identification number (NIP).

The regulation on the use of KSeF didn’t take into consideration the uniqueness of the legal nature of the VAT group, as well as the VAT settlements in the local government units. Based on current regulation, the governmental units are treated as a single VAT taxpayer, using one NIP number.

Similarly, in the case of VAT groups, separate VAT taxpayers who create one new taxpayer (a VAT group) use one NIP number. The proposed changes resulted from the ongoing public consultations that took place in December 2021. Additionally, the change was also requested in May 2022 by the Union of Polish Metropolises.

Proposed amendments to the current e-invoice regulation

The draft law provides the possibility to grant additional limited rights for the local government units and members of VAT groups. Moreover, local government units and VAT groups will be able to grant administrative rights, to manage permissions in KSeF, to a natural person who is their representative.

Thanks to such delegated rights, there will be an option to manage authorisations for the local government unit and for the entity that is a member of a VAT group. Moreover, it is significant that a person with such authorisation will not have simultaneous access to invoices in other units within the local government or within other members of a VAT group.

For local government units and VAT groups, granting or withdrawing authorisation to the natural person must be performed electronically. It’s not possible to submit a paper form to notify the competent tax authority.

Remaining issues for KSEF and enforcement date

As mentioned, the proposed amendments are in response to concerns that were raised by the impacted entities. However, they don’t meet all the needs of local government units and VAT groups. For instance, the question of how to assign an inbound electronic invoice to a particular internal unit or member of a VAT group remains open. This is because invoices contain only the data of the taxpayer, which in this case is the local government unit or a VAT group, and not data of the internal unit or member of a VAT group.

The regulation will enter into force 14 days after the date of publication. However, provisions that apply to VAT group members will be effective from 1 January 2023.

Take Action

Want to ensure compliance with the latest e-invoicing requirements in Poland? Get in touch with our tax experts. For more information see this overview about e-invoicing in Poland or VAT Compliance in Poland.

For the UK and other non-EU businesses it’s vital to determine the importer of the goods into the EU as this will impact the VAT treatment.

For goods under €150 there are simplified options such as the Import One Stop Shop (IOSS) or special arrangements through the postal operator. However, when supplying goods over €150, businesses need to consider how they want to import the goods.

One option is for businesses to deliver on a Delivered Duty Paid (DDP) basis and be the importer of the goods into the EU. This improves the customer experience for B2C transactions but creates a liability to be registered in the county of import and to charge local VAT, along with additional compliance requirements. If goods are moved from that country to other EU countries, then depending on the supply chain, the One Stop Shop (OSS) could be used to avoid further VAT registration requirements.

Customer as importer – available options

Due to increased compliance costs many businesses have chosen not to be the importer and pass this obligation to the end customer. If a business chooses this route, options are still available.

The business could simply place the full obligation on the customer., The customer would be sent a payment request for the VAT and any duty by the carrier before delivery., There could also be a handling fee passed on to the customer. Once paid the goods would be delivered This approach doesn’t provide the best customer experience.

This is why many businesses have opted for a ’landed cost method’ offered by many couriers. The customer is still the importer on the import documentation, but the business collects the VAT and duty from the customer at the time of sale and settles the carrier’s invoice on their behalf. In theory, this avoids the need for the business to register in the EU and still offers the customer a seamless experience. However, this raises the question: is the customer actually the importer?

The business impact of incorrect terms

Some tax authorities are beginning to take a different view of arrangements for goods with a value above €150 where goods are imported directly into the Member State of delivery. A law change on 1 July 2021 included the concept “where the supplier intervenes indirectly in the transport or dispatch of the goods”. This is to counter arrangements that allowed the seller to argue they were not distance selling but making a local sale, so only had to account for VAT in the Member State of dispatch of the goods.

Following the law change some tax authorities are arguing this concept means if a seller sells to a private individual in their country and the seller arranges for the goods to be delivered from a non-EU country and customs cleared in their EU Member State, the place of supply is the Member State as the supplier has indirectly intervened in the transport.

As a result, the supplier must register and account for VAT in the Member State even if the customer is the importer of the goods. This argument could result in double taxation and can create additional compliance obligations along with tax authority audits – all of which add additional costs and time for businesses.

How should businesses approach this change?

It’s important that businesses adopting a method where the customer is the importer put correct arrangements in place. This includes ensuring website terms and conditions reflect the fact the customer is the importer and giving the company the power to appoint a customs declarant on their behalf. It’s also important that customs documentation is completed correctly. Avoiding terms such as DDP on the website is also key as this implies that the business is the importer.

Still have questions?

For help with EU import queries or if your company needs VAT compliance assistance get in touch to speak with one of our tax experts.

The Colombian tax authority (DIAN) continues to invest in the expansion of its CTC (continuous transaction controls) system. The latest update proposes an expansion of the scope of documents covered by the e-invoicing mandate.

In this article we’ll address the newly published Draft Resolution 000000 of 19-08-2022. This advances important changes for taxpayers covered by mandatory e-invoicing rules.

These draft changes include a new obligation to issue equivalent documents (documentos equivalentes) in electronic format, a schedule for its implementation, updated technical documentation and other significant developments, all of which require taxpayers to ready themselves to comply.

What will change for Colombian businesses with these new e-invoicing proposals?

Amongst many proposed changes, the draft resolution’s main purpose is to regulate the electronic issuance of the equivalent document.

These documents correspond to the sales invoice under Colombian law, but cover specific types of transactions and are regulated in the draft resolution, as follows:

  1. Cash register receipt generated with P.O.S systems
  2. Cinema admission ticket
  3. Passenger transport ticket
  4. Extract issued by trusts and fund companies
  5. Passenger air transport ticket
  6. Document in localised games
  7. Ballot, fraction, form, card, ticket or instrument issued in games of chance, other than localised games
  8. Document issued for the collection of toll payments
  9. Proof of settlement of operations issued by the Stock Exchange
  10. Document for operation of agricultural stock exchange and other commodities
  11. Document issued for domiciliary public services
  12. Entrance ticket to public shows and performing art shows
  13. Entrance ticket to other public shows

This means that all taxpayers subject to the Colombian e-invoicing mandate who issue one of these equivalent documents will be required to do so in an electronic format, according to the Technical Annex of the Electronic Equivalent Document version 1.0 (Anexo técnico del Documento Equivalente Electrónico), introduced by the draft.

Additionally, the draft provides an initial regulation of the electronic documents of the invoicing system (documentos electrónicos del sistema de facturación). These are documents that aid control by the tax and customs authority, to support tax or customs declarations and/or to support the procedures carried out before DIAN, under the provisions of subsection 1 of article 616-1 of the Tax Statute.

Finally, the technical specifications of the system’s main electronic invoice, the sales e-invoice, is updated to version 1.9 (Anexo técnico de la Factura Electrónica de Venta version 1.9).

Deadlines for Colombia’s e-invoicing proposals

The obligation to issue the equivalent document in electronic format will be implemented gradually, according to the type of equivalent document. It starts on 1 March 2023 and will cover all equivalent documents on 1 July 2023.

Early voluntary implementation will also be possible, once the functionality is available in DIAN’s system. Until the deadlines for the electronic implementation of the equivalent document are fulfilled, these must continue to be issued in accordance with Resolution No. 000042 of 2020.

The draft also sets a schedule for implementation of the electronic documents of the invoicing system, during the taxable years of 2023 and 2024. These documents will be further regulated in the six months following the validity of the official resolution, as well as the adoption of its technical annex, which hasn’t been presented with the draft resolution.

Lastly, the proposal establishes the deadline for implementation of the Technical Annex of the electronic sales invoice version 1.9 by taxpayers. This will be at least three months following its official publication.

What’s next for e-invoicing in Colombia?

The draft resolution, once officially published, will derogate DIAN Resolution No. 000042 of 2020 in all provisions that are contrary to it, except those related to equivalent documents, which will remain in force until the DIAN establishes their electronic implementation.

Taxpayers can also expect new legislation regulating the remaining electronic documents of the invoicing system, in the months following the official publication of this draft resolution.

Until then, companies should prepare for the significant upcoming changes and adjust their businesses processes to comply with the new Colombian mandate.

Take Action

Need help with evolving e-invoicing requirements in Colombia? Get in touch with our tax experts about how Sovos can help your business meet your VAT compliance obligations.

It seems such a short time since HMRC sent a reminder letter in March 2022 recalling the upcoming changes to the UK’s customs systems and explaining what to do to prepare for these changes.

With the deadline rapidly approaching, here’s a brief recap.

The Customs Handling of Import and Export Freight (CHIEF) system, which is now nearly 30 years old (it was introduced in 1994), will close in two phases:

The Customs Declaration Service will serve as the UK’s single customs platform, with all businesses needing to declare all imported and exported goods through the Customs Declaration Service (CDS) after 31 March 2023.

CDS benefits and key changes

As mentioned on the HMRC website, the Customs Declaration Service toolkit gives traders access to the many benefits of the upcoming changes. In summary:

Benefits

CDS changes

What does this mean in practice?

To be able to use CDS and import goods into the UK from 1 October 2022 and to export from 1 April 2023, businesses are required to have the following:

Businesses should also consider:

Take Action

Want to know more about how changes to the UK’s customs systems will impact your business and its compliance? Contact us to find out more.

Update: 14 February 2023 by Andrés Landerretche

Colombia Update: P.O.S. Tickets Threshold Rules Now in Force

As of February 2023, new rules came into force in Colombia. These are for the issuance threshold of equivalent documents generated by Point of Sale (P.O.S.) systems.

As a result, a ticket issued by cash registers with P.O.S. systems (tickets de máquinas registradoras con sistemas P.O.S.) must not exceed the maximum amount of five Tax Value Units (UVT), without including the amount of tax for each sale or service provision operation.

For sales operations and the provision of services exceeding this amount – excluding taxes – taxpayers must issue an electronic sales invoice as part of the country’s e-invoicing mandate.

It is important to note that the equivalent documents generated by cash registers with a P.O.S. system do not entitle the purchaser to discountable sales tax (VAT) or costs and deductions in income and complementary taxes.

However, purchasers may request that the seller issue a sales invoice when they have the right to request deductible taxes, costs, and deductions. In this case, the supplier must issue an electronic sales invoice.

The Colombian tax authority (DIAN) officialised the implementation of the five UVT thresholds for tickets generated through P.O.S. systems through Resolution 1092, published on 1 July 2022.

The Resolution implemented the phased roll-out of this mandate, following the calendar below:

Every 1 January from the taxable year 2024, taxpayers obliged to issue a sales invoice that choose to issue the equivalent document, called a ticket for a cash register with a P.O.S. system, must adjust the value of the applicable UVT to comply with the limitation of five UVT in the issuance of each ticket.

Speak with a member of our expert team for further clarification of e-invoicing in Colombia.

 

Update: 23 August 2022 by Kelly Muniz

The Colombian tax authority (DIAN) has concentrated heavily on expanding its electronic invoicing regime over recent years. The DIAN introduced the first schedule for mandatory implementation of e-invoicing in the country in 2018, and, since then, the system has gradually encompassed more transactions and taxpayers.

In this article, we’ll look at the two latest new mandates in Colombian e-invoicing:

  1. The introduction of the support document for purchases (Documento Soporte en Aquisiciones con No Obligados a Facturar Electronicamente) and
  2. The implementation of a threshold for the issuance of point of sale (POS) tickets.

These new obligations have significant impact and require adjustments by taxpayers. These changes also represent a substantial expansion of Colombia’s e-invoicing to include entirely new transactions under its scope.

Support document for acquisitions

The Colombian tax authority has created a new e-document type, the support document for acquisitions from subjects not obliged to issue e-invoices. This support document and its corrective notes were introduced by Resolution 167 of 2021. It expands the e-invoicing scope to ensure more transactions fall within the mandate and allows support for tax deductions.

Taxpayers obliged to generate this e-document are those under the country’s e-invoicing regime. It includes those subject to income and complementary tax payments and responsible for VAT when purchasing goods and/or services from suppliers not obliged to issue e-invoices or equivalent documents and require support for costs and deductions in the mentioned tax declarations. To generate the support document, the taxpayer must be authorised by the DIAN as an electronic issuer.

The support document and its corrective notes must be generated in XML format and contain a CUDS: unique support document code (código único del documento soporte). This alphanumeric code allows it to be unequivocally identified. After generation, the e-documents must be transmitted for clearance by the DIAN either in real-time or, at the latest, on the last calendar day of the week, for accumulated operations with the same supplier carried out during that same week.

Having been postponed from its original implementation date, the generation of the acquisitions support document became mandatory on 1 August 2022.

Implementation of POS ticket issuance threshold

According to this mandate, cash register tickets generated through POS systems (tickets de máquinas registradoras con sistemas P.O.S.) may be issued by subjects obliged to invoice, provided that the sale of the good and/or the provision of the service recorded therein doesn’t exceed five (5) UVT (tax value unit) for each document, excluding taxes.

This means that, for operations covering sales of goods and/or provision of services exceeding the amount of five (5) UVT, taxpayers under the country’s e-invoicing mandate must issue an electronic sales invoice. The purchaser of goods and/or services below the threshold may still require the issuance of a sales invoice, in which case the supplier must provide it.

The threshold was de facto introduced in 2021 by Law 2155, but it was only in July 2022 that the DIAN established a phased roll-out of the mandate, through Resolution 1092, following the calendar below:

Are you ready for these changes?

While the generation of the support document for acquisitions is already srequired, taxpayers must start preparing to comply with the new threshold for e-invoice issuance in place of POS tickets. Sovos can help your company adjust to e-invoicing and ensure compliance with Colombia’s new mandates.

Take Action

Contact our team of experts today to ensure your company is complying with Colombia’s e-invoicing mandates.

Update: 30 November 2022 by Charles Riordan

ANAF Reverses Position on Grace Period Extension

Romania SAF-T Filing declarations are changing. The draft order extending the grace period for SAF-T will not be implemented. The President of ANAF has confirmed that decision.

The extension originally supported large taxpayers who have had to submit SAF-T since 1 January 2022. ANAF now states that large taxpayers have, on the whole, complied with the original deadlines. This renders the extension “not appropriate.”

ANAF will follow an unofficial policy of leniency for SAF-T submissions. According to a spokesperson, the agency will first give notifications to delinquent taxpayers. Next, they will issue warnings. Fines are a last resort.

The initial six-month grace period for SAF-T hasn’t been formally extended, but it remains in force. Taxpayers will not receive penalties for late or missed filings while the grace period exists.

The grace period applies for six months after the obligation to file SAF-T arises. This obligation begins:

Still have questions about SAF-T Filing Declarations in Romania? Speak to our tax experts or see this overview about VAT Compliance in Romania.

 

Update: 18 August 2022 by Charles Riordan

Romania Extends SAF-T Filing Grace Period

On 1 August 2022, the Romanian National Agency for Fiscal Administration (ANAF) published a draft order extending the current grace period for Standard Audit File for Tax (SAF-T) declarations from six months to twelve months. The order will take effect upon approval and publication in the Official Gazette. At the time of writing, approval and publication are expected shortly.

The Romanian tax authority initially granted the grace period due to the complexity of the country’s SAF-T filing. The SAF-T must include available data from master files, source documents, general ledger entries, and, on a separate cadence, data related to fixed assets and inventory. Because of this complexity, ANAF instituted a six-month grace period, during which taxpayers would not be penalised for late or incorrect filings. The ANAF also implemented SAF-T in phases, with the large taxpayers obliged to file before mid-sized and small taxpayers.

ANAF has acknowledged, however, that even large taxpayers have struggled to meet the technical requirements of the SAF-T declaration. Therefore, with the initial six-month grace period set to expire, ANAF proposes to extend it to alleviate the burden on filers.

The grace period, as before, takes effect from the date a taxpayer is obliged to submit the SAF-T declaration. The obligation for different categories of taxpayers begins:

Romania SAF-T grace period extension

This means that taxpayers who are obliged to file SAF-T in 2022 will now have grace periods extending into 2023 (e.g. 1 January 2023 for “large taxpayers” who were categorised as such in 2021; 1 July 2023 for “large taxpayers” who were only categorised as such in 2022).

The language of the amendment doesn’t limit the twelve-month grace period to large taxpayers, so it is presumed that the grace period will apply to other taxpayers as well. This amendment would extend the grace period for medium taxpayers into 2024 and all others into 2026. Further clarifications on this point may be released in the future.

The rollout of SAF-T in Romania has been eventful, with multiple revisions to both the schema itself and taxpayer obligations. Taxpayers doing business in Romania must ensure that they stay abreast of the latest developments with this declaration, as there will undoubtedly be more to come.

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The Italian Customs Authorities recently updated their national import system by applying the new European Union Customs Data Model (EUCDM). These new changes came into effect on 9 June 2022.

According to the new procedure, the old model of paper import declarations has been abolished. The import declarations are now transmitted to the Italian Customs Authorities’ information system with a digital signature.

What does this mean in practice?

The acceptance of a customs declaration is notified to the economic operator (that can be the importer, the Customs Agent, etc.) through a Master Reference Number (MRN), an alphanumeric string of 18 characters.

The old IM message (telematic track to be submitted at the time of the import to the Italian Customs Authorities through the Customs Telematic Service (i.e. Servizio telematico doganale (STD)) has been replaced by the following paths as defined by EU legislation:

How can I know how much import VAT is due on goods imported from outside the EU into Italy?

At the time of the release of the goods, Italian Customs Authorities make available the “summary statement for accounting purposes of the customs declaration” (prospetto di riepilogo ai fini contabili della dichiarazione doganale). The summary includes all data necessary to detect customs duties, import VAT and any other charges due.

The summary mentioned above is made available to the importer and the declarant/representative in the reserved area of the single portal of Italian Customs Authorities through the “Document management – customs declarations” service.

We recommend that importers contact their Customs Agent to receive a copy of this summary for their accounting purposes.

How and when can I recover my Italian import VAT?

As per Italian VAT Law, possessing a Single Administrative Document (SAD) is needed to exercise the right to recover import VAT in Italy. As the SAD is now unavailable, Italian Customs Authorities, in agreement with the Italian Revenue Agency, agreed that the new accounting summary is sufficient to allow the importer to exercise the right to recover the import VAT.

Therefore, the new accounting summary is needed to exercise your right to recover the import VAT paid to the Italian tax authorities.

Moreover, the right to recover import VAT is exercised only once the summary is reported in the Purchase VAT Ledger as per art. 25 of Italian VAT Law.

Finally, the import document must be included in your quarterly VAT return and your annual VAT return which must mirror your Italian VAT Ledgers.

To ensure your import VAT is not lost, we recommend considering that the last day to recover the import VAT, related to an import of goods carried out in 2022, is 30 April 2023.

Further documents introduced from June 2022

In addition to the Summary Prospetto di riepilogo ai fini contabili della dichiarazione doganale, discussed above, economic operators will be able to receive:

Italian Customs Authorities advise customs operators to provide the Prospetto di svincolo to transporters as proof of the fulfilment of customs formalities in the case of checks.

Take Action

Speak to our team if you have any questions about the latest Italian importing requirements and their impact on your business’s compliance.

As previously predicted by Sovos, the threshold for implementing mandatory e-invoicing has been lowered by the Indian authorities. According to the Central Board of Indirect Taxes and Customs Notification No. 17/2022 – Central Tax, from 1 October 2022 compliance with the e-invoicing rules will be mandatory for taxpayers with an annual threshold of 10 Cr. rupees (approximately 1.270.000 USD) or more.

Recap of India’s e-invoicing requirements

The Indian e-invoicing system falls under the category of continuous transaction controls (CTCs) under the Goods and Services Tax (GST) framework. The legal validity of the invoice is conditional based on the Invoice Registration Portal (IRP) digitally signing the invoice and providing an Invoice Registration Number (IRN). If the IRN is not included in an invoice, the invoice will not be legally valid.

The scope covers both domestic and cross-border transactions. The IRP clearance process is mandatory for B2B, B2G and export transactions. So, taxpayers in scope must issue their invoices (as well as other documents that need an IRN) according to the new system for all B2B, B2G or export transactions.

Taxpayers in scope of e-invoicing must generate e-waybills through the e-invoicing system. It is not possible to voluntarily adhere to the e-invoicing system. This means that taxpayers not satisfying the threshold limit cannot adopt CTC invoicing.

Implementation timeline

Before the initial introduction, the e-invoicing plan was announced by the Indian authorities as early as 2018. Afterwards, the evolvement of the plan has been as follows:

1 January 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.500 Crore or more

1 February 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.100 Crore or more

1 October 2020: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.500 Crore or more (six months later than previously intended). For the first 30 days, there was a grace period during which invoices could be reported after they had been issued.

1 January 2021: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.100 Crore or more.

1 April 2021: Threshold for mandatory e-invoicing lowered to taxpayers with turnover between Rs. 100 Crore to Rs. 50 Crore.

1 April 2022: Threshold lowered from Rs. 50 Crore to Rs. 20 Crore. Taxpayers above Rs. 20 Crore must implement e-invoicing.

1 October 2022: Threshold will be lowered from Rs. 20 Crore to Rs. 10 Crore. Taxpayers above Rs. 10 Crore must implement e-invoicing.

What’s next for e-invoicing in India?

Some changes concerning the e-invoicing workflow are expected. Currently, there is a single platform (IRP) for the clearance process but multiple IRPs will be introduced soon. The Indian Authorities have already approved new IRPs, demonstrating that the authorities wish to have an interoperable e-invoicing market and are moving ahead with their plans to realise their goals.

Additionally, B2C invoices are not currently covered by the IRP clearance, yet the authorities have announced their intention to include those in scope of their CTC system.

India is a challenging jurisdiction for many taxpayers; businesses must have smart digitization and maintenance strategies to stay compliant. The benefits of digitization can be realised through a global strategy that businesses might put in place.

On 22 July, the EU Commission opened four new infringement proceedings against the United Kingdom for allegedly breaching the 2021 Northern Ireland Protocol on conditions related to customs requirements, excise tax and VAT. The EU has brought seven proceedings against the UK over the Protocol since 2021.

The Northern Ireland Protocol

Following the UK’s departure from the EU in 2020, the parties agreed that customs checkpoints on the land border between Northern Ireland and the Republic of Ireland could lead to political instability. The Protocol was an attempt to avoid border posts between the two countries.

Instead, the Protocol ensures customs checks are done in Northern Irish ports before goods are released into the Republic of Ireland. This process effectively created a customs border on the Irish Sea. In addition, the Protocol allows Northern Ireland to follow EU rules on product standards and VAT rules related to goods.

Potential UK Protocol Amendments

The Protocol has been controversial in the UK, as it creates special rules for Northern Ireland that don’t apply in England, Scotland or Wales. Members of the UK’s governing Conservative Party – including Liz Truss, a frontrunner to replace Boris Johnson as UK Prime Minister – have recently introduced a Northern Ireland Protocol Bill that would allow the UK to amend the terms of the Protocol.

Among other things, the draft legislation seeks to remove dispute settlement from the jurisdiction of the Court of Justice of the European Union, authorises “green [fast track] channels” for goods staying within the UK, and allows for UK-wide policies on VAT. Proponents of the bill claim it is necessary to protect the “essential interest” of peace in Northern Ireland.

Protocol Amendment Controversy

However, European Union Representatives have condemned this draft legislation as a potential violation of international law. In its most recent infringement proceedings, the EU alleges that the UK has not substantively implemented parts of the Protocol at all.

In particular, the EU claims that:

The last point is particularly interesting for VAT purposes, as the IOSS scheme is a signature piece of the EU’s “VAT in the Digital Age” initiative.

At the time of writing the Northern Ireland Protocol Bill has not yet been adopted by the UK Parliament. It awaits review in the House of Lords. The UK and the EU have stated that further negotiations over the Protocol would be the preferred option. The parties, however, remain far apart on the details.

The EU has set out two months for the UK to respond to the infringement action. Failing any new agreements, the action could lead to possible fines and/or trading sanctions between the parties. Taxpayers conducting cross-border trade between the UK and EU should ensure they stay on top of future developments.

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Need more information on IOSS and how it could impact your business’s compliance? Get in touch with our team.

Data is one of the most valuable assets of companies and individuals. Data gathered, cleaned and analysed well enables businesses to realise their utmost capabilities. With the digitization trend, error-prone paper forms, ledgers and books are replaced by electronic versions. This development gave companies more control over their data and liquidated data for further analysis.

This is also true for governments. Since tax income is one of the most significant revenue sources for countries and transactional data is the basis of tax income calculation, transactional data analytics is also essential for governments.

Purpose of real-time data collection

Receiving data in electronic form enables tax authorities to estimate their tax income and income sources better and eventually collect taxes more efficiently. This process has led many global tax authorities to require taxpayers to transmit relevant tax data electronically. Furthermore, the reliability of real-time data has shown to be so appealing that taxpayers are required to transmit data in real-time to the tax authority in many countries.

The real-time or near-real-time tax-relevant data transmission requirement is a new trend often referred to as Continuous Transaction Controls (CTC). CTCs require each transaction to be transmitted to the tax authorities to enable immediate and continuous control. CTCs are becoming more and more common around the world. The initial purpose of the CTCs when it was first launched in Latin America, the origination point, was to reduce the VAT gap. By looking at countries which have adopted CTCs, it’s fair to say that CTCs have already achieved this goal. However, tax authorities subsequently noticed that the benefits of CTCs are not limited to closing the VAT gap.

The vast amount of data collected through CTCs presents immense opportunities for tax authorities. Tax authorities can achieve unprecedented levels of business transaction transparency. Tax authorities T can calculate taxpayers’ compliance risk, and can plan audits based on these risk calculations. Furthermore, data can be used to drive fiscal and economic policy and shared with other government bodies. For instance, during an economic crisis, it’s possible to determine the business sectors most affected through the sales data reported by taxpayers. Those effected can be granted support (through tax exemptions, reduced rates etc.). The OECD Forum on Tax Administration’s chart compares different tax jurisdictions’ data management and analytics abilities and can be used to understand different countries’ data analytics technology.

Challenges for businesses

Granular data collection and transparency of source data create challenges for businesses as there is little room for mistakes, shortcuts or later error correction. Businesses will need to ensure much more granular tax determination decision-making earlier in their processes and their trading partners’ processes.

Furthermore, ensuring compliance where CTCs are implemented can be challenging, especially for international companies, who have historically viewed taxes as something to be addressed by local accountants. Viewing tax as primarily a local concern by adopting local solutions that combine business and compliance functionality for each jurisdiction will be difficult to reconcile with a business’ broader digital and finance transformation and alignment, which is often global.

To step up their game, businesses should focus on data gathering and having a central data repository to have the “big picture” rather than acquiring local solutions to “save the day”. Real-time data transmission also requires clean data to maintain. The global digital transformation strategy must be in place to meet these requirements as well as a scalable technology to manage future tax demands.

Latest Changes

1 July begins the second half of 2022, and in line with that milestone, changes have started to be implemented in the CTC sphere. In this blog, we highlight vital developments that have taken place in and outside Europe that may influence the continuous transaction controls (CTC) landscape globally.

The Philippines: Pilot program

The Philippines has officially implemented its mandatory continuous transaction controls (CTC system, which consists of the near-real-time transmission of electronically issued invoices and receipts. On 1 July 2022, the Philippines tax authority launched the Electronic Receipt, Invoice and Sales Reporting System (EIS) pilot program.

This initiative was first introduced in 2018 by the Tax Reform for Acceleration and Inclusion Act, known as TRAIN law. 100 selected pilot taxpayers are now obliged to issue and transmit e-invoices/receipts to the Bureau of Internal Revenue (BIR) through the EIS platform. (Philippines Advances Towards Mandatory CTC Reporting | Sovos)

Romania: E-Factura system and E-Transport system

Romania has been taking steps toward implementing its continuous transaction controls (CTC system since 2021. As of 1 July 2022, Romanian taxpayers are required to use the CTC e-invoicing system e-Factura for the supply of high-fiscal risk products in B2B transactions and all B2G transactions. Suppliers must transmit structured invoices issued in XML format to the E-Factura system. Subsequently, the seal will be applied by the Ministry of Finance as proof of clearance. Such invoice will be legally valid under the Romanian regulation. (Romania: Questions Remain as Deadline Looms | Sovos)

Alongside the 1 July 2022 go live for the CTC e-invoicing mandate, the e-transport system has been introduced to monitor high-fiscal-risk goods transported domestically. Taxpayers must issue an e-transport document before certain goods are transported. Moreover, taxpayers must send files to the tax authorities in XML format. Based on Act No. 106 issued by the Romanian government on 30 June 2022 and the change of Articles 13 and 14 of GEO, the fines for non-compliance with the e-transport requirements will not be effective until 1 October 2022. Also, starting from 1 July 2022, SAFT began to apply to large taxpayers as the penalty grace period has ended.

Vietnam: CTC Mandate

On the list of countries expanding their e-invoicing requirements is also Vietnam, where the issuance of e-invoices became mandatory for all taxable persons operating in Vietnam as of 1 July 2022. Previously, the expected deadline was 1 November 2020, but the tax authority extended it due to the difficulties encountered by local companies to implement on time a compliant e-invoice solution.

Moreover, enterprises, economic organisations, other organisations, business households and individuals must register with the local tax administration to use e-invoices according to the rules established in Decree 123. (Vietnam: E-invoicing Roll-Out in July 2022 | Sovos).

Portugal – B2G invoicing postponement

Mandatory B2G invoicing has been postponed for small, medium, and microenterprises with the enactment of  Law Decree 42-A/2022. The initial date was 1 July 2022. Now, the B2G e-invoicing is going to be mandatory from 1 January 2023. The reason for this change is that, after extending the deadline for acceptance of electronic invoices in PDF until 31 December 2022, the Portuguese government considered it important to also extend the deadline for receiving and processing B2G electronic invoices for micro, small and medium-sized companies until 31 December 2022 (Portugal: Mandatory B2G invoicing for SME’s postponed again | Sovos)

Turkey, South Korea and Italy: Expansions of existing mandates

In Turkey, the tax authority expanded the scope of taxpayers required to use e-fatura, e-arsiv and e-waybill applications. This expansion was done by either adding new sector-based mandates or decreasing the annual revenue threshold. The new requirements became applicable recently, and the taxpayers in the scope of the changes started using e-documents as of 1 July 2022. (Turkey Expands Scope of E-Documents (sovos.com)

In South Korea, e-invoicing has been mandatory for all corporate businesses since 2011. An issued e-tax invoice must be transmitted to the National Tax Service (NTS) within one day of the invoice being issued. The current change concerns the threshold limit for individual businesses, which from 1 July 2022 has been lowered to KRW 200,000,000.

Italy has also entered another phase of implementing its CTC requirements. Starting with cross-border invoices, the Esterometro (the report of cross-border invoices) has been replaced with the transmission of cross-border invoice data to the SDI in a FatturaPA format from 1 July 2022. Additionally, the recently published Decree n.73 established a threshold for the cross-border invoice reporting mandate. Taxpayers are only required to report transactions that exceed the amount of EUR 5,000 for every single operation. This applies, more specifically, to purchases of goods and services not territorially relevant for VAT purposes in Italy, under Articles 7 to 7-octies of Presidential Decree 633/1972.

Moreover, e-invoicing through the SDI became mandatory from 1 July 2022 for taxpayers applying the flat-rate VAT regime (regime forfettario), as well as amateur sports associations and third sector entities with revenue up to EUR 65,000. Lastly, e-invoicing became mandatory between Italy and San Marino from 1 July 2022. The system for e-invoice exchange between Italy and SM will leverage the SDI as the access point for Italian taxpayers and a new, comparable hub for companies in San Marino.

Many countries around the world are either introducing or expanding their existing CTC Regimes with the active changes taking place globally. Sovos continues to monitor which countries are next on the list to build its local CTC regimes and comply with the international standards.

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The Philippines continuous transaction controls (CTC) Electronic Invoicing/Receipting System (EIS) has been officially kicked off for the 100 large taxpayers selected by the government to inaugurate the mandate. Although taxpayers were still struggling to meet the new e-invoicing system’s technical requirements just before the go-live date, the Philippines upheld its planned deadline and went live with this pilot on 1 July 2022.

The Philippines roll-out has once again highlighted the challenges of complying with new mandates and shown that readiness is vital.

Together with one of the six initial pilot companies, which started testing early this year, Sovos has developed the first software solution to obtain approval by the EIS to operate e-invoice transmission through the government’s transmission platform. Sovos’ solution is up and running in the Philippines.

Release of new regulations

One day before the EIS go-live, the Philippines tax authority, BIR (Bureau of Internal Revenue), published Revenue Regulations n. 6-20228-2022, and 9-2022, containing the new system’s policies and guidelines and documenting the rules and procedures adopted by the EIS.

While the regulations do not represent news for pilot taxpayers who have successfully implemented their CTC e-invoice reporting systems, the same might not be accurate for those preparing to comply with the new mandate. The legislation officially establishes the country’s e-invoice/receipt issuance and reporting initiative, first introduced in 2018 by the Tax Reform for Acceleration and Inclusion Act (TRAIN), and documents relevant information.

Who needs to comply?

As of 1 July 2022, 100 selected pilot taxpayers have been obliged to issue and transmit e-invoices and e-receipts through the EIS. The BIR is planning a phased roll-out for other taxpayers within the scope of the mandate, starting in 2023, but no official calendar has been announced yet.

Taxpayers covered by the mandate are:

The mandate requires electronic issuance of invoices (B2B), receipts (B2C), debit and credit notes and transmission through the EIS platform in near real-time, that is, in up to three (3) calendar days counted from issuance date. Documents must be transmitted using the JSON (JavaScript Object Notation) file format.

Issuing and transmitting

Issuance and transmission can be done through the EIS taxpayer portal or using API (Application Programming Interface), in which taxpayers must develop a Sales Data Transmission System and secure certification before operating through the EIS. This entails the application for the EIS Certification and a Permit to Transmit (PTT) by submitting documentation with detailed information about the taxpayer’s system.

Although the regulations state that the submission of printed invoices and receipts is no longer required for taxpayers operating under the EIS, archiving requirements have not been modified. This means that during the 10-year archiving period, taxpayers must retain hard copies of transmitted documents for the first five (5) years, after which exclusive electronic storage is allowed for the remaining time.

Additionally, the legislation states that only the invoices successfully transmitted through the EIS will be accepted for VAT deduction purposes.

Taxpayers were not ready to comply

Many of the 100 pilot taxpayers struggled to comply with the country’s deadline. For this reason, the EIS has allowed alternations to the deadline for certain taxpayers, provided they submit a Sworn Statement detailing the reasons why they are not able to meet the requirement on time and a schedule with the date they intend to comply by, which are subject to the EIS’ approval.

Regarding non-compliance, the regulations state that the tax authority shall impose a penalty for delayed or non-transmission of e-invoices/receipts to the EIS and that unreported sales will be subject to further investigation.

What’s next?

After the pilot program kick-off and legally establishing the CTC framework, the government plans to gradually roll out the mandate to all taxpayers included in the scope in 2023. However, taxpayers who are not in the mandatory scope of the EIS may already opt to enrol in the system and be ready to comply beforehand.

Sovos was the first software provider to become certified, in conjunction with one of the pilot taxpayers, to transmit through the EIS, and is ready to comply with the Philippines CTC e-invoice reporting. Our powerful software combined with our extensive knowledge of the Philippines tax landscape helps companies solve tax for good.

Take Action

Need to ensure compliance with the latest e-invoicing requirements in the Philippines? Speak with a member of Sovos’ team of tax experts

On 1 January every year, taxpayers operating in Peru must assess their monthly income over a certain period determined by law to verify if they fall under the obligation to keep electronic ledgers. Taxpayers above the established threshold or who wish to voluntarily keep their ledgers electronically may do so by using the Electronic Ledgers Program (Programa de Libros Electrónicos – PLE), which covers all electronic books, or through the System of Electronic Ledgers (Sistema de Libros Electrónicos Portal – SLE), exclusively for the records of sales and purchases.

Earlier this year, however, the Peruvian tax authority (SUNAT) approved a new system specifically for the records of sales and purchases, the Integrated System of Electronic Records (Sistema Integrado de Registros Electrónicos – SIRE). Through the new Resolution 40-2022/SUNAT, the Electronic Record of Purchases (Registro de Compras Electrónico – RCE) was introduced, a module similar to the Electronic Record of Sales and Earnings (Registro de Ventas e Ingresos Eletrónicos – RVIE) created in 2021 and already in use by taxpayers.

The two modules, RVIE and RCE, compose the SIRE. This new system will be rolled out gradually, starting in October 2022, obliging taxpayers to migrate from the PLE and SLE to generate their records of sales and purchases exclusively through SIRE while maintaining the PLE for other ledgers.

How the SIRE works

The primary purpose of the SIRE is to simplify the generation of records of sales and purchases for taxpayers. Through the SIRE, a proposal for the RVIE and the RCE is automatically generated. It is available from the 2nd calendar day of every month. The taxpayer may accept, modify or replace it with the information they wish to present to SUNAT. If there are no transactions during the monthly period, the taxpayer must still submit a blank file to SUNAT.

Under the current systems (PLE and SLE), SUNAT doesn’t generate a proposal; the taxpayer enters all sales and purchases information and generates the records. With the SIRE, however, SUNAT uses information from its Electronic Invoice System (Sistema de Emisión Eletrónica – SEE) to create a proposal of the RVIE and RCE, which the taxpayer submits in each declaration period. The record is updated daily with the information received on the previous day.

The RCE has certain peculiarities compared with the RVIE, already in use. The RCE requires the generation of two separate files, the records of domestic and cross-border purchases. Even if no cross-border transactions are carried out, a blank RCE must still be submitted to SUNAT. Additionally, taxpayers may exclude specific purchase invoices and include them in the RCE at any time for 12 months from the invoice issuance date.

After the taxpayer’s revision, the RVIE and RCE are filed in conjunction, and a receipt status message (Constancia de Recepcion), containing relevant information, is delivered to the taxpayer’s electronic mailbox.

The SIRE can be accessed through the SUNAT portal, using the SIRE application installed on the taxpayer’s computer or through SUNAT’s API web service.

What changes for taxpayers?

Once taxpayers become obliged to the exclusive maintenance of sales and purchase records through the SIRE, they must discontinue keeping such records in the PLE, SLE or paper ledgers. However, because the SIRE covers the RVIE and RCE exclusively, taxpayers will still need to maintain the PLE, which contains all other ledgers.

This means taxpayers must be aware of the distinct set of rules applied to the PLE and the SIRE. An example is that the SIRE allows modification of an already “closed” record from a previous period without waiting until the next period, as with the PLE and SLE. In the SIRE, adjustments can be made at any time using the different annexes provided by SUNAT, with no limitations on the year the record was generated.

Another significant change is that taxpayers will no longer have to store, file and preserve electronic records since SUNAT will do this for them.

Gradual roll-out of the SIRE

Implementation of the SIRE will happen gradually, according to the following schedule:

Taxpayers may also start using the SIRE voluntarily if they are obliged to keep the Records of Sales and Purchases and are enrolled in the SUNAT operations portal (clave SOL), according to the following calendar:

What’s next for the SIRE?

Resolution 40-2022/SUNAT becomes effective on 1 October 2022. However, because most companies in Peru are already obliged to keep Records of Sales and Purchases, the largest groups of taxpayers must be ready to comply with the new mandate starting 1 January 2023.

Take Action

Speak to our team if you have any questions about the latest tax requirements in Peru. Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.