Japan's Tax System

Japan's Tax System

Starting with the introduction of a multiple tax rate system in 2019, Japan is in the middle of a multi-year process of upgrading its consumption tax system. Through this significant change, the Japanese government seeks to solve a tax leakage problem that has existed for years.

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Japan's tax reforms

The recent series of tax reforms in Japan started with the introduction of its multiple tax rate system on 1 October 2019. Following this, changes in the country’s indirect tax, the Japanese Consumption Tax (JCT), started to take place. To counter systemic problems caused by the current ledger system structure, anew system – the Qualified Invoice System –will be introduced from 1 October 2023. The key difference from the current system is that a Qualified Invoice must include a breakdown of applicable tax rates for that given transaction.

Not long after these changes were announced, a new organisation, the E-Invoice Promotion Association (EIPA), was established in July 2020. It aims to promote digitization of overall commercial transactions. Leveraging the opportunity presented by the new Qualified Invoice System, the EIPA began to work on developing a standard specification for electronic invoices.

Since January 2021, the EIPA – with support from the Japanese government – has been working with the OpenPEPPOL team to develop a Japanese specification that meets the country’s regulatory framework and business demands. In September 2021, Japan acquired PEPPOL Authority status and aims to allow businesses to issue and receive electronic invoices through PEPPOL in the Autumn of 2022.

Japan's tax system quick facts

  • Under the new system, only registered JCT payers can issue qualified tax invoices. On the buyer side, taxpayers will only be eligible to input tax credit where a qualified invoice has been issued
  • Taxpayers must register with Japan’s National Tax Agency (NTA) to issue qualified invoices. Registration began in October 2021 and must be completed before 31 March 2023
  • Invoices must be archived according to Italian-style storage requirements: to be compliant, taxpayers must either timestamp their invoices or draw up a Storage and Maintenance Guideline describing how the invoices are archived and how this meets applicable requirements
  • Invoices should be stored in such a way to guarantee the integrity, authenticity and availability during the storage period
  • Foreign storage is allowed provided it fulfills the requirement for storage under Japanese law
  • Outsourcing of invoice issuance is allowed with no restrictions or requirements

Japan's mandate rollout dates

  • 1 October 2019 – Japan introduces its multiple tax rate system
  • 14 September 2021 – the Japanese Digital Agency obtained PEPPOL Authority status
  • 1 October 2022 –EIPA aims to enable businesses in Japan to issue and receive electronic invoices through PEPPOL
  • 31 March 2023 – Latest date to apply for registration with the NTA to issue qualified invoices
  • 1 October 2023 – Qualified Invoice System will be introduced

Quick facts about Japan's Consumption Tax

Introduced in January 1989, it’s the indirect tax charged on the consumption of goods and services in Japan. There are national and regional levies, and a reduced rate of Consumption Tax in Japan.

Japan’s Consumption Tax is the equivalent of VAT which is charged across the European Union.

Consumption Tax in Japan is levied when a business transfers goods, provides services or imports goods into Japan.

A refund of Consumption Tax in Japan isn’t possible for businesses without taxable sales in the country.

How Sovos can help

As Japan implements its Consumption Tax System updates, requirements for Japanese taxpayers will change. Need help ensuring your business stays compliant with all future Japanese Consumption Tax system updates?

Our experts continually monitor, interpret and codify regulatory changes from around the world into our software, reducing the compliance burden on your tax and IT teams.

Serbia E-invoicing

Serbia is in the process of introducing mandatory e-invoicing for all taxpayers

Following other Eastern European countries such as Poland and Romania, Serbia is on its way to implementing the mandatory e-invoicing system for the B2B (business to business) and B2G (business to government) sectors.

The Law on Electronic Invoicing that came into force in May 2021, introduces the clearance e-invoicing system and presents the centralised continuous transaction controls (CTCs) platform called SEF (Sistem E‑Faktura) for sending, receiving, capturing, processing and storing structured electronic invoices. Additionally, there is a system to help taxpayers with the processing and storage of invoices called the Sistem za Upravljanje Fakturama (SUF).

The new legislation aims to replace paper invoices with electronic invoices and outlines the requirements for the issuance of e-invoices in B2B and B2G transactions.

Have questions? Get in touch with a Sovos Serbia VAT expert.

Scope of e-invoicing mandate

Under the new e-invoicing framework, e-invoices must be sent and received in accordance with Serbian e‑invoicing standards (custom application of the standard EN 16931-1). All e‑invoices must be submitted via a centralised platform to the recipient who must accept or reject the invoice.

  • For invoices relating to B2G transactions: 15 days to accept an invoice, in the case of no response the invoice will be deemed accepted.
  • For invoices relating to B2B transactions: This requirements will come into force in 2023. After 15 days a re-notification is sent, if the buyer does not accept or reject the electronic invoice within five days from the date of re-notification that the electronic invoice has been issued, the electronic invoice shall be deemed rejected

Currently in scope are resident taxpayers in the private and public sector and non-resident businesses with a local fiscal representative in Serbia.

Quick facts

  • Serbian e-invoices must be issued in an XML format and comply with UBL 2.1 Standard
  • Taxpayers must register first via the eID.gov.rs portal to start using the SEF platform, by using either:
    • Qualified Electronic Certificate or
    • Parameters for two-factor authentication
  • Invoices must be sent and received to EN 16931‑1 standard
  • The Ministry of Finance needs to give consent to the service provider, who needs to be registered in Serbia, to provide e-invoicing and archiving
  • Issuing electronic invoices through SEF ensures the integrity and authenticity of the electronic invoice

Mandate rollout dates

May 2021: Law on Electronic Invoicing entered into force

1 May 2022: All suppliers in the public sector must send invoices electronically and the Serbian government must be able to receive and store them. (G2G/B2G)​

1 July 2022: Serbian public entities are obliged to send e‑invoices to companies, who must be able to receive and process them. (G2B)​

1 January 2023: E‑invoicing will be extended to the entire B2B sector. (B2B)​

How can Sovos help?

Need help to ensure your business stays compliant with the emerging mandatory e‑invoicing for all taxpayers in Serbia?

Our experts continually monitor, interpret and codify legal changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solution to address the changing VAT compliance requirements in Serbia can help companies stay compliant.

Indonesia’s VAT requirements

Indonesia’s e-invoicing system and continuous transaction controls

After experiencing challenges in its tax control system, Indonesia adopted an e‑invoicing system, locally known as e‑Faktur. Leveraging data reported in real-time via continuous transaction controls (CTCs) allows the Indonesian tax authorities to reduce occurrences of fraud whilst helping to close the tax gap.

Have questions? Get in touch with a Sovos Indonesia CTC expert.

CTC reforms

Introduced in 2014 and effective from 2016, Indonesia’s e‑invoicing system seeks to combat the tax gap. Indonesia’s solution was the implementation of an invoice clearance system, where invoices must be approved by the local tax authority prior to being sent to a customer.

Quick facts

  • E-invoicing has been mandatory for all corporate VAT taxpayers since July 2016.
  • E-invoices (e-Faktur Pajak or e-FP) should be created by applications and systems prescribed by the Director of Taxation (DGT). These include client desktop, web-based and host-to-host applications.
  • Electronic signatures are required for the issuance of e-invoices.
  • It’s compulsory for all invoices to be processed and issued electronically via the government hosted eFaktur platform. The submission platform for the VAT return has been integrated with the e-invoicing platform.
  • Electronic certificates are required to verify taxpayer identity and are valid for two years.
  • Activation code and password are required for access to e-Nofa to request electronic tax invoice serial numbers.
  • Using e-Faktur, VAT returns are periodically submitted (typically monthly).

Mandate rollout dates

2014 – e-Faktur Pajak introduced

2016 – e-Faktur Pajak became effective

1 October 2020 – New e-Faktur Pajak version 3.0 released

How can Sovos help?

Need help to ensure your business stays compliant with the e-invoicing obligations in Indonesia?

Our experts continually monitor, interpret and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solution for VAT compliance changes can help companies stay compliant in Indonesia and around the world.

Israel E-Invoicing

Plans for a continuous transaction controls system

In an effort to combat VAT fraud, Israel is undergoing a tax reform. Currently under an EU-based post-audit approach, Israeli authorities have announced their ambition to move towards the more Latin American-style of continuous transaction controls (CTCs) where invoices are approved prior to their issuance. The details of the proposed system, as well as a timeline for roll-out, have yet to be published.

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CTC Reforms

Israel is currently in the process of moving away from a post-audit approach to VAT. We expect to learn more about the details of the new CTC regime in the near future.

Quick Facts

  • E-invoicing is currently permitted in Israel provided it’s prominently stated on the invoice that it is a ‘computerized document’
  • A digital signature is required to ensure the integrity and authenticity of the invoice
  • Storage of e-invoices must be within Israel unless derogation has been granted. This rule also applies to the mandatory backups
  • Outsourcing of archiving also requires derogation

Need help to ensure your business stays compliant with evolving CTC obligations in Israel?

Our experts continually monitor, interpret and codify complex legal and technical changes into our software solutions, keeping you up-to-date and reducing the compliance burden on your tax and IT teams. Learn how Sovos’ VAT solutions help companies stay compliant in Israel and around the world.

Lithuania’s VAT Requirements

Lithuania’s SAF-T Mandates Framework

Seeking to modernise and digitize its tax systems, the Lithuanian Customs Office of the State Tax Inspectorate announced sweeping changes to its tax system in 2016 with the introduction of the Standard Audit File for Tax (SAF‑T) and the launch of its online portal, eSaskaita.

Have questions? Get in touch with a Sovos Lithuania SAF-T mandates expert.

SAF-T mandates

SAF-T mandates

Implemented with a phased approach, Lithuania’s SAF‑T mandate became mandatory for all taxpayers in 2020. Whilst there is no periodic SAF‑T reporting, businesses must maintain records for the tax authorities in the event they are requested.

Quick facts on SAF-T mandates

  • E-invoices must be accepted provided its integrity and authenticity can be guaranteed from the point of issuance until the end of the storage period.
  • If an invoice is in electronic form, data ensuring its integrity and authenticity must be stored by electronic means.
  • Suppliers may submit documentation by:
    • Using any certified PEPPOL Access Point with an AS4 Profile
    • Manually keying in the invoice information via an online portal
    • Uploading files in XML format (this requires the economic operator’s accounting system to be suitable for storing e-invoices in this format).
SAF-T mandates
SAF-T mandates
  • Service providers to Lithuanian taxable persons not established in an EU Member State must comply with certain additional requirements regarding the outsourcing of e-invoice issuance.
  • The i.MAS, Lithuania’s “Intelligent Tax Administration System,” comprises three main parts:
    • i.SAF reporting of sales and purchase invoices on a monthly basis
    • i.VAZ reporting of transport/consignment documents
    • i.SAF-T accounting transaction report, which is only required when requested by the tax authority.
  • Full SAF-T files are only submitted upon request of the Lithuanian tax authority.

SAF-T mandates rollout dates

  • 1 Oct 2016 – Requirement to submit data on issued and received VAT invoices began
  • 2016 -2019 – Phased rollout of SAF‑T requirements to Lithuanian businesses dependant on revenue
  • Jan 2020 – All businesses required to comply with SAF‑T mandate
  • 2021 – Management and archiving of documents, including invoices, became a licensed activity and must meet certain requirements for integrity, authenticity, security and management to be certified by the Lithuanian Chief Archivist
SAF-T mandates
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Lithuania’s SAF-T Requirements

Understand more about Lithuania SAF-T including when to comply, submission deadlines, filing requirements and how Sovos can help.

How can Sovos help with SAF-T mandates and VAT compliance?

Need help to ensure your business stays compliant with the SAF‑T obligations in Lithuania?

Our experts continually monitor, interpret and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solution for Lithuanian SAF‑T and other VAT compliance changes can help companies stay compliant.

Thailand’s New Approach to Electronic Invoicing

New regulations for e-tax invoicing solutions and receipts expected soon

Thailand’s current e-invoicing legal framework has been in effect since 2012 and follows a post-audit approach.

The Thai Revenue Department and Electronic Transactions Development Agency (ETDA) are working together to improve and further develop the e-tax invoicing system. As a result, new regulations on e-tax invoicing and receipts are expected in the future.

Get in touch with a Sovos Thailand electronic invoicing expert.

E-tax invoicing solutions

From 2017, the Thai Revenue Department issued regulations on electronic tax invoices and receipts. Subject to approval, taxpayers can prepare, deliver and keep their e-tax invoices and receipts in electronic format.

Quick facts about Thailand electronic invoicing

  • E-invoices must be digitally signed using a certificate issued by a certification authority and approved by the Thai Revenue Department.
  • E-invoices must be submitted in XML format to the Revenue Department monthly.
  • Outsourcing of e-invoice issuance is allowed provided the third-party service provider is certified by the Thai Revenue Department.

E-tax invoicing rollout dates

  • 2012 – E-invoicing permitted
  • 2017 – New regulations issued on electronic e-tax and receipts.
  • 2020 – EDTA began a certification process for service providers to assess whether applicants’ solutions are secure and compliant.

How can Sovos help with invoicing solutions?

Need help to ensure your business stays compliant with emerging e-invoicing obligations?

Our experts continually monitor, interpret and codify legal changes and requirements into our software solutions, taking care of your indirect tax compliance so you can focus on your core business.

Learn how Sovos’ solutions for continuous transaction controls and VAT compliance obligations can help companies stay compliant.

Luxembourg VAT Requirements

VAT in Luxembourg

Luxembourg is one of many European countries to implement SAF-T and e-invoicing to provide greater visibility into a wide range of business, accounting and tax data.

Luxembourg introduced SAF-T requirements in 2011. In 2019 the country introduced an e-invoicing legislation.

Luxembourg is part of the EU single market economy and falls under the EU VAT regime. The EU issues VAT Directives laying out the principles of how the VAT regime should be adopted by Member States. These Directives take precedent over any local legislation.

VAT law within the country is administered by the Administration de l’Enregistrement et des Domaines and is contained within the General Tax Code.

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Quick facts

  • Just like in any other EU Member State, e-invoicing is permitted in Luxembourg, subject to the buyer accepting the exchange of electronic invoices.

  • Businesses must ensure integrity of invoice content and authenticity of origin for their invoices.  Integrity and authenticity can be proved using Advanced Electronic Signatures, ‘proper EDI’ with an interchange agreement based on the EC 1994 recommendation, and Business Controls-based Audit Trail.

  • In May 2019, Luxembourg adopted legislation about e-invoicing in public procurement following the EU Directive 2014/55/EU. The Directive states that e-invoices will continue to be exchanged voluntarily by suppliers to the government and the centralised PEPPOL access point will continue to be used.

  • Prior authorisation is required before outsourcing to a service provider – written authorisation is recommended.

  • Invoices stored in electronic form must have evidence of their integrity and authenticity stored electronically as well.

  • E-invoices may only be stored in EU Member States (or other countries) of which Luxembourg has signed a mutual tax assistance treaty – prior to notification and access.

  • VAT returns may be filed monthly, quarterly or annually electronically through Luxembourg’s online platform (eCDF) via PDF or XML format. Alternatively, annual filings can be made either in electronic format through the portal or via sending a paper copy of the VAT return to the requisite tax office.

  • To submit tax returns electronically, taxpayers must ensure the service provider they use is certified within eCDF.

SAF-T reforms

Officially implemented in 2011, Luxembourg’s Standard Audit File for Tax (SAF-T) is locally known as Fichier Audit Informatisé AED (FAIA).

Businesses must, if requested, submit their financial data electronically in a format that is compliant with AED electronic audit file specifications (i.e., in the specified FAIA format). Only resident businesses subject to the Luxembourg Standard Chart of Accounts must file the FAIA.

Mandate rollout dates

2011 – Introduction of SAF-T, known as Fichier Audit Informatisé AED (FAIA)

2019 – Adoption of e-invoicing legislation in public procurement with 2014/55/EU Directive

How can Sovos help?

Need help to ensure your business stays compliant with evolving e-invoicing, reporting and SAF-T obligations in Luxembourg?

Keeping up with VAT compliance obligations has become more difficult as Luxembourg continues to take steps to reduce its VAT gap and modernise the system.

Our experts continually monitor, interpret and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solutions for changing SAF-T and VAT obligations can help companies stay compliant.

Slovakia VAT Requirements

Slovakia expands continuous transaction control

The modernisation of tax and tax controls remains a high priority for Slovakia’s tax authority. The Slovakian Ministry of Finance plans to introduce a continuous transaction control (CTC) scheme, with the aim to lower Slovakia’s VAT gap to the EU average and obtain real-time information about underlying business transactions. 

Have questions? Get in touch with a Sovos Slovakia CTC expert.

Quick facts on Slovakia E-Invoicing and VAT reporting

e-Invoicing

  • Just like in any other EU Member State, e-invoicing is permitted in Slovakia, subject to the buyer accepting the exchange of electronic invoices.
  • While Slovakia today is considered a post audit jurisdiction, a CTC reform is currently underway.
  • The draft legislation is expected to be published in 2022. The Act should be valid from 1 January 2023 and the respective obligations are as of now expected from 1 January 2024. The system is expected to become mandatory for B2G transactions from January 2023.
  • E-invoices can be stored in another Member State without notification, provided they are available in Slovakia should they be requested by the tax authority.

VAT Reporting

  • Filed either monthly or quarterly and must be submitted through a downloadable form issued by the Slovakian tax authority.
  • Additionally, Slovakia requires the submission of the Slovak Control Statement.
  • Businesses who accept cash payments must use an ‘online cash register’ that connects directly to the tax authority system.
  • Data submitted to the tax authority must be in XML format.
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Slovakia CTC Requirements

Understand more about Slovakia’s CTC requirements including when businesses need to comply and how Sovos can help.

Slovakia's upcoming CTC reform 2022

The envisaged CTC system, Electronic Invoice Information Systems (IS EFA, Informačný systém elektronickej fakturácie), will become mandatory for B2G transactions from early 2022.

Full details of the upcoming CTC system are not yet available, but the proposed legislation is expected to be published early 2022. The preliminary statements announced by the authorities in February 2021 aim to introduce mandatory real-time invoice reporting for all types of transactions (including B2B and B2C) by 2023.

The incoming CTC mandate will require businesses to report invoice data to the tax authority prior to issuing the invoice to their trading parties. Trading parties must then in turn report receipt of the invoice. Data must be sent either through certified accounting software or the government portal.

Mandated E-Invoicing rollout dates

  • June 2022: Voluntary public testing of the prototype platform IS EFA and OpenAPI will begin.
  • January 2023: The first phase of the mandatory e-invoicing system will go live and include B2G, G2G and G2B transactions.

The second phase will start at a later date and cover B2B and B2C transactions.

How can Sovos help with VAT compliance?

Need help to ensure your business stays compliant with evolving reporting and emerging CTC obligations?

Our experts continually monitor, interpret, and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Learn how Sovos’ solution for VAT compliance changes can help companies stay compliant.

Philippines VAT Requirements

VAT in the Philippines

There have been improvements in recent years to VAT revenue collection in the Philippines, but there are a considerable number of exemptions from the country’s 12% VAT rate.

After receiving funding from South Korea to investigate and adopt a CTC e-invoicing regime, the Philippines is expected to roll out a phased VAT control reform over the coming years.

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CTC reforms

In 2018, the Philippines launched the Tax Reform for Acceleration and Inclusion (TRAIN), which included several tax reform proposals.

The TRAIN proposals included the requirement for large taxable persons who were engaged in e-commerce or export to issue e-invoices, e-receipts and to report sales data to the country’s tax administration, the Bureau of Internal Revenue (BIR).

Quick facts

  • In July 2022, the Department of Finance (DOF) intends to launch a CTC e-reporting system pilot program covering B2B invoicing and B2C receipts per the TRAIN law mandate. By this date, the 100 largest taxpayers in the country must be live with the system.
  • E-invoice data must be reported in JSON format and contain the issuer’s electronic signature.
  • All e-invoice data and e-receipts must be transmitted to the tax authority’s invoice system (EIS) either immediately after issuance or in a batch submission once per day (near real-time).
  • E-invoice data reporting and e-receipt reporting can be done either through dedicated APIs or through the BIR’s web portal.
  • Suppliers can deliver invoices to customers electronically via email in PDF format or as a hard copy.
  • E-invoices must be archived for 10 years.

Mandate rollout dates

2018 – TRAIN law was introduced.

End of January 2022 – Pilot program environment was made available to eligible taxpayers to establish test connectivity and verify file formats.

April 2022 – Six pilot companies will test the system end-to-end by transmitting e-invoices to the EIS.

July 2022 – 100 pilot taxpayers, including the initial six will have to report all their invoicing data to the EIS through the new system.

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Philippines CTC Requirements

Understand more about Philippines’ continuous transaction controls including when businesses need to comply, and how Sovos can help.

How can Sovos help?

Do you need help ensuring your business stays compliant with the upcoming e-invoicing obligations in the Philippines?

Sovos already provides early adopters with a solution connected to the Philippines Tax Authority Platform and helps other taxpayers prepare for the extended rollout of the CTC e-reporting system.

Learn how Sovos’ solution for VAT compliance changes in the Philippines can help your business stay compliant.

China's E-Invoicing Regime

The move to customer facing e‑invoicing grows in China.

China’s VAT digitization journey began nearly two decades ago with the rollout of a tax regime called the Golden Tax System. This created a national taxation platform for reporting and invoicing, as well as legislation regulating the use and legal effect of e-signatures.

With the increase of mobile payment adoption, the push towards customer-facing e-invoicing grows. The Chinese government has taken initiatives to further reform reporting and invoicing with a proposed nationwide e-invoicing service platform to provide an e-invoice issuance service to all taxpayers free of charge.

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Reforms

E-invoicing has been gradually introduced in China, starting with the B2C segment – in some cases by mandating large amounts of taxpayers in the public service sector to issue VAT e-invoices to their customers.

Whilst e-invoicing is not yet fully permitted, the issuance of e-invoices has been widely accepted in B2C instances for several years. They are mandatory in certain core service-based industries including telecommunications and public transportation. Invoices are issued via the national system with hardware and software certified by the state authority.

A pilot program was launched in September 2020, which enables specific taxpayers operating within China to voluntarily issue VAT special e-invoices. Special invoices are used to claim input VAT and are generally used in B2B transactions.

Quick facts

  • E-invoices must have an electronic signature instead of the original invoice stamp.
  • Taxpayers can use the tax authority’s platform for VAT services to check and verify the electronic signature of e-invoices.
  • Accounting documents, including invoices, may be stored electronically provided that the e-archive meets integrity and authenticity criteria, and the processing system adheres to requirements on functionality and security.

Mandate rollout dates

  • September 2020 – China’s e-invoicing pilot program began allowing e-invoice issuance for B2B purposes. It initially only included Ningbo, Shijiazhuang and Hangzhou.
  • December 2020 – Pilot expanded to include Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan and Shenzhen.
  • January 2021 – Pilot further expanded to include Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hunan, Guangxi, Hainan Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao.
  • December 2021 – A new pilot program, only for selected taxpayers, started in Shanghai, Inner Mongolia and Guangdong, introducing the so called “fully digitized e-invoice”, a new type of e-invoice that simplifies the e-invoice issuance for both B2B and B2C purposes.

How can Sovos help?

As China’s new e-invoicing program will shortly expand to include most companies, we inch ever closer to full scale e-invoicing possibilities in China.

Our experts continually monitor, interpret and codify changes into our software, reducing the compliance burden on your tax and IT teams.

Register your interest now to learn how Sovos’ solution for tackling this major VAT reform in China will help your company stay compliant.

Romania’s VAT regime

Romania introduces measures to digitally transform its tax administration and close the VAT gap

Seeking to close its VAT gap, the Romanian tax authorities have been discussing the idea of implementing measures to combat the country’s ever-increasing VAT gap. After years of discussion, the country announced its Standard Audit File for Tax (SAF-T) initiative which began in January 2022.

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Romania’s SAF-T reforms

The Organisation for Economic Co-operation and Development (OECD) introduced SAF-T in 2005, and Romania joins a long line of European Member States adopting this form of tax legislation.

From 1 January 2022, companies in the General Directorate for the Administration of Large Taxpayers list must report their VAT electronically to the Romanian tax authorities. Transaction and accounting data must be reported through Declaratiei Informative D406 (SAF-T Romania).

This move is not uncommon and follows the trend being seen across the EU with tax administrations requiring increasingly granular data in real-time in Italy, Spain and Hungary paving the way for pre-populated VAT returns.

Romania SAF-T quick facts

  • D406 must be submitted electronically in PDF format with an XML attachment and electronic signature. The combined file size must not exceed 500MB for it to be accepted at the portal.
  • Submission deadlines can be periodically, annually or on demand.
  • There is currently a six-month grace period from 1 January 2022.
  • Asset information is expected to be required annually, though no date has officially been announced.

Continuous transactions control (CTC) reforms

The ANAF, Romania’s tax authority, has introduced the RO e-Invoice system. It is optional in the first phase, aiming as a first step at the relationship between companies and the state (B2G) and as a second step, the B2B transactions with high-risk products.

The ultimate goal, as is often the case when a tax administration wants visibility of more data so they can take steps to close their national VAT gap, looks set to be a system that ‘clears’ each supplier invoice prior to it being sent to a buyer.

In this respect, as of 1 July 2022, suppliers will be obliged to use the RO e‑Invoice system in B2B transactions, including high fiscal risk products. Moreover, Romania wants to expand the implementation of e‑invoicing to a broader economy as a next step.

Finally, the Ministry of Finance has announced the introduction of a mandatory e-transport system for monitoring certain goods on the national territory from 1 July 2022. The transportation of high-fiscal risk products must be declared in the e-transport system a maximum of three calendar days before the start of the transport, in advance of the movement of goods from one location to another.

The system will generate a unique code (ITU code) following the declaration. This code must accompany the goods being transported in physical or electronic format with the transport document. Competent authorities will verify the declaration and the goods on the transport routes.

CTC quick facts

  • E-invoices must be submitted in XML format.
  • Use of the RO e-Factura system will be mandatory for high-fiscal risk products in B2B transactions from 1 July 2022. High-risk fiscal products include:
    • Vegetables, fruits, roots and edible tubers, other edible plants
    • Alcoholic beverages
    • New constructions
    • Mineral products (natural mineral water, sand and gravel)
    • Clothing and footwear
  • Suppliers of high fiscal risk products must use the RO e-Factura system even if their buyers are not registered with the system.
  • The transportation of high-fiscal risk products must be declared in the e-transport system.

Mandate rollout dates for SAF-T and CTCs

Romania SAF-T

September 2021: Voluntary test period began with D406T allowing taxpayers to become familiar with the data extraction and mapping requirements.

January 2022: Large taxpayers included in the Romanian tax authority’s list in early-2021 must comply with new SAF-T regulations.

1 July 2022: Large taxpayers added to the list in November 2021 must comply with the new SAF-T regulations.

1 January 2023: Medium taxpayers must begin submitting SAF-T data.

1 January 2025: Small taxpayers must begin submitting SAF-T data.

Romania CTC

March 2020: Pilot program launched.

November 2021: Voluntary participation of B2G scheme.

1 April 2022: Voluntary participation of suppliers in B2B transactions including high-fiscal risk products scheme.

1 July 2022: Mandatory e-invoicing for B2B suppliers of high-fiscal risk products and mandatory issuance of e-transport document for the transport of high fiscal risk products.

2023: Mandate expansion to other B2B flows expected.

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Romania’s SAF-T Requirements

Understand more about Romania SAF-T including when to comply, penalties, requirements and how Sovos can help

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Romania CTC Requirements

Understand more about Romania’s CTCs including when businesses need to comply and how Sovos can help.

How Sovos can help

Need help to ensure your business stays compliant with the evolving VAT obligations in Romania?

Learn how Sovos’ solutions for SAF-T reforms and e-invoicing VAT compliance can help companies stay compliant.

Saudi Arabia - E-Invoicing

Saudi Arabia leads the way to continuous transaction controls in the Gulf

Saudi Arabia e-invoicing from December 2021

Saudi Arabia will introduce an e-invoicing regime in a phased approach starting in December 2021. Having only introduced VAT on 1 January 2018, the country is leading the way in digitizing tax compliance in the Gulf Region.

The finalised rules published by Saudi Arabia’s tax authority, Zakat, Tax and Customs Authority (ZATCA) confirm the go-live date of the second phase from 1 January 2023.

In addition to other requirements, phase two also introduces integration with a digital ZATCA platform for continuous transaction controls (CTCs), requiring taxpayers to clear invoices ahead of transmission to buyers.

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Mandate Quick Facts

Phase 1 – Mandatory e-invoicing generation with post audit controls: Starts on 4 December 2021

  • Applies to all resident taxable persons in Saudi Arabia.
  • Requires taxpayers to generate, amend and store e-invoices and electronic notes (credit and debit notes) across B2B, B2C and B2G transactions, including exports.
  • Businesses must generate e-invoices and their associated notes in a structured electronic format.
  • Electronic invoices and notes must contain all necessary information.
  • Any structured electronic format permitted.
  • B2C invoices must include a QR code.
  • All invoices must contain a time-stamp.
  • Integrity of e-invoices is explicitly required.
  • Storage requirements same in phase 1 and 2 (must be archived in a system or server that is physically located within the territory of Saudi Arabia. Upon meeting certain additional requirements, taxpayers who have a subsidiary in Saudi Arabia may have their central computer systems located outside Saudi Arabia).
  • Suppliers must store e-invoices in structured format regardless of how they’re exchanged with buyers.
  • Certain prohibited functionalities for e-invoicing solutions.

Phase 2 – CTC regime: Starts on 1 January 2023 requiring taxpayers to transmit e-invoices in addition to electronic notes to the tax authority, ZATCA, for clearance.

  • A phased approach across different taxpayers is anticipated.
  • B2B invoices will operate under a clearance regime while B2C invoices must be reported to ZATCA’s platform within 24 hours of issuance.
  • All e-invoices must be issued in the mandatory XML format.
  • Tax invoices can be sent in XML or PDF/A-3 (with embedded XML) format to buyers. B2C invoices must be presented in paper form, however, based on mutual agreement by the parties, B2C invoices can be shared electronically or through any other way where the buyer can read it.
  • A compliant e-invoicing solution must have the following features:
    • Generation of a universally unique identified (UUID) plus invoice sequential number.
    • Tamper-resistant invoice counter.
    • Some ability to save and archive e-invoices and electronic notes.
    • Generation of a cryptographic stamp for B2C invoices, a hash, and a QR code for each e-invoice and electronic note.

Important dates

Phase 1: 4 December 2021 – all resident taxable persons in the Kingdom to generate, amend and store e-invoices and electronic notes (credit and debit notes).

Phase 2: 1 January 2023 – additional requirements for taxable persons to transmit e-invoices as well as electronic notes to the ZATCA. This will be a phased adoption starting with larger companies with gradually more coming into scope of the mandate. Companies can expect six months’ notice ahead of the deadline by which they must comply.

INFOGRAPHIC

Saudi Arabia CTC Requirements

Understand more about Saudi Arabia’s continuous transaction controls including when businesses need to comply, phase one and two compliance and how Sovos can help.

How Sovos can help

Need help to ensure your business is VAT compliant in Saudi Arabia? Sovos serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Saudi Arabia and across the globe. Sovos uniquely combines local expertise with a seamless, global customer experience.

The VAT Import One Stop Shop (IOSS)

Simplify EU VAT with IOSS in one single return

The Import One Stop Shop (IOSS) is here. Simplify your EU VAT compliance into a single VAT return – grow your sales in the EU, avoid fines and penalties and enhance the customer experience by removing unexpected fees for buyers.

Since its launch, we’ve been helping e-commerce businesses of all sizes make the switch to the new scheme. Our IOSS service provides you full access to our VAT compliance software solutions and a team of indirect tax specialists. Let us handle the initial registration, monthly filing and intermediary requirements so you can continue to focus on what you do best.

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What is IOSS?

Since July 2021, all goods imported into the EU, regardless of value, are subject to VAT. As of the same date, businesses selling imported goods valued at less than EUR 150 can now use IOSS to collect, declare and pay VAT to the local tax authorities in a single VAT return. IOSS simplifies your EU VAT compliance – unlock the full potential of the EU e-commerce market, maximise your cash flow, and provide an excellent customer service.  

In order to obtain a registration, non- EU businesses need to appoint an intermediary. They can then obtain an IOSS VAT registration number in the Member State where the intermediary is established.  

Full IOSS service

Let us handle the registration process, obtain a VAT number for your business and file the monthly IOSS returns. All included, no hidden fees.

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We act as your IOSS Intermediary

Non-EU businesses can only register for the scheme through an intermediary. We can act as your intermediary for you. 

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What are the benefits?

  • Goods move through customs faster – IOSS calculates and accounts for VAT ahead of time instead of applying upon import 
  • With an IOSS VAT registration number, the VAT is accounted for at the point of sale 
  • Reduced charges for customs clearance – without an IOSS VAT registration, import VAT will be due when the goods are cleared in the EU and there are likely to be higher customs clearance costs 

Quick Facts

  • The IOSS simplification is available to use now for any qualifying transactions 
  • The scheme requires additional record-keeping: businesses must retain more detailed records of transactions than previously
  • IOSS VAT declarations are monthly  
  • Businesses can correct previous IOSS VAT returns in the next one
  • Non-EU businesses may need to appoint an intermediary and obtain an IOSS VAT registration in the intermediary’s country of establishment in the EU
  • Depending on the nature of business activity/supply chains, non-EU retailers may need to report under the Union One Stop Shop (OSS) and non-Union OSS schemes. 
  • Businesses need at least one ‘standard’ VAT registration and possibly more due to warehouses or similar if they are to use Union OSS.  No other VAT registrations is needed for IOSS or non-Union OSS.

Penalties and Fines

Local tax authorities can issue penalties and fines to businesses if returns and payments are not submitted on time. In addition, repeated noncompliance can lead to a two-year exclusion from the scheme. Businesses would then need to register for VAT in all Member States where they import goods or have alternative arrangements in place to deal with the import VAT. 
 
Businesses that want to use IOSS may require an intermediary. If an intermediary is required you can’t do it alone. Our comprehensive service handles all your registration, filing and intermediary requirements.  

It’s time to get EU VAT compliance right with IOSS and Sovos

Our IOSS service gives you full access to our team of indirect tax specialists and VAT compliance software. Let us handle the initial registration, monthly filing and intermediary requirements so you can focus on what you do best. 

Contact us to speak to a VAT expert and learn how to get started. 

Portugal’s VAT Regime

Portugal pushes further ahead with VAT digitization

Back in 2019, Portugal passed a mini e-invoicing reform consolidating the country’s framework around SAF-T reporting and certified billing software.

Since then, a lot has happened: non-resident companies were brought into the scope of e-invoicing requirements, deadlines were postponed due to Covid, and new regulations have been published.

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Quick Facts

  • Use of certified billing software is mandatory for the creation of all types of invoices; this is understood to be the taxpayer’s ERP system.
  • A QR code should be included in all invoices. Technical specifications about the content and placement of the code in the invoice are available on the tax authority’s website.
  • A unique ID number (ATCUD) must be included in all invoices and is part of the content of the QR code. The ATCUD is a number with the following format ‘ATCUD:Validation Code-Sequential number’.
  • In April 2021, Portugal clarified that non-resident companies with a Portuguese VAT registration should comply with domestic VAT rules. This includes using certified billing software for invoice creation, among others. These companies must also ensure integrity and authenticity of e-invoices, which in Portugal means using a qualified electronic signature or seal, or use of EDI with contracted security measures.
  • B2G invoices must be issued electronically in the CIUS-PT format and transmitted to the public administration through one of the available web services.

Important dates

  • Since 1 July 2021, non-established but VAT registered companies must adopt certified billing software.
  • Issuance of B2G e-invoices:
  • Mandatory B2G e-invoicing: all supplies to public sector companies require the related invoice to be issued in CIUS-PT format and transmitted via an approved web service.
    • 1 January 2021:  Phased roll out on a voluntary basis started for large companies.
    • 1 July 2021:  Extended to include small and medium-sized businesses subject to a grace period during which PDFs accepted by public sector buyers.
    • 30 June 2022: The new format and transmission approach must be used by all businesses including microenterprises.
  • 1 January 2022:  A QR Code and ATCUD will be required in all invoices. This is voluntary for 2022 and expected to become mandatory on 1 January 2023.

Need help to ensure your business is VAT compliant in Portugal?

Sovos provides a complete VAT, SAF-T and B2G compliance solution for Portugal helping customers meet the demands of the digital transformation of tax and public procurement through a single provider. Sovos uniquely combines local expertise with a seamless, global customer experience.

India’s Continuous Transaction Control e-invoicing model applies to both domestic and cross-border transactions

India E-Invoicing

Under the new Goods and Services Tax (GST) framework, the Indian e-invoicing system falls under the category of continuous transaction controls (CTCs). The invoice data reporting obligation to the governmental portal is a mandatory step before an invoice can be issued.

The legal validity of the invoice is conditional 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 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 e.g. associated eWaybills) according to the new system for all B2B, B2G or export transactions. India has made multiple changes to the initial regulation and future changes are inevitable.

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Mandate Quick Facts

  • Invoice data should be transmitted to the IRP in JSON format.
  • The IRN obtained from the IRP is a validity requirement for invoices.
  • Invoices can be exchanged in JSON or PDF format as well as in paper form between the supplier and buyer.
  • Archiving is mandated (storage period of eight years).

Mandate Rollout Dates

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

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

  • 1 October 2020: Beginning of the mandatory 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 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 lowered to taxpayers with an annual threshold of Rs. 10 Crore.

Penalties

If an invoice is not registered on the IRP, it will be considered unissued and will result in penalties of at least 10,000 Rupees for each instance of noncompliance. Penalties under various sections of GST will be levied with interest.

Sovos Helps Companies Stay Compliant with India E-invoicing

By February 2021 the initial specifications published by the Indian tax authority in December 2019 had already been revised three times. Future changes are inevitable.

Our experts continually monitor, interpret, and codify these changes into our software, reducing the compliance burden on your tax and IT teams.

Find out how Sovos can help you to meet your clearance e-invoicing obligations in India.

Greece to introduce Continuous Transactions Controls (CTCs) for domestic and cross-border transactions

Greece myDATA

Greece introduced a new Continuous Transaction Controls (CTC) scheme, myDATA – an eAccounting system with eReporting elements, that requires taxpayers to transmit transactional and accounting data to the tax administration, in real-time or periodically, which populates a set of online ledgers maintained on the government portal. With taxpayers transmitting transaction data to the government portal myDATA system brings Greece in line with the global trend towards CTCs.

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Mandate Quick Facts

  • The myDATA scheme applies to Greek taxpayers obligated by law to keep their accounting records as per the Greek Accounting Standards. It covers B2B, B2G, and B2C transactions.
  • myDATA eBooks record: a summary of income and expense transactions, classifications of transactions, accounting adjustments which aim to provide a comprehensive overview of the taxpayer’s accounting and tax results.
  • When businesses file their tax returns, the data declared in them will be reconciled against the data in the eBooks.
  • A discrepancy between the eBooks and the tax returns triggers a two-phased reconciliation process whereby the taxpayer should correct the resulting difference, otherwise audits or penalties will be incurred.

Mandate Rollout Dates

  • 1 October 2020: Go-live of voluntary reporting of income and expense as well as classifications through all reporting methods (except for reporting through e-invoicing vendors was enacted on 20 July 2020).

  • 1 April 2021: Go-live mandatory phase of myDATA.

  • 28 February 2021: Voluntary reporting of historical data issued from 1 Oct 2020 – 31 Dec 2020. If the issuer failed to report the data within this timeline, the recipient can report in March 2021. The issuer can accept them until 30 April 2021.

  • 31 October 2021: Deadline for mandatory reporting of historical data related to the period 1 January 2021 – 31 March 2021.

Penalties

Failure to achieve consistency between the data registered in the eBooks and the reported data in the tax returns triggers penalties or tax audits. Secondary legislation with details on the penalties is expected.

Sovos helps companies stay compliant with Greece’s myDATA

Sovos serves as a true one-stop-shop for managing all CTC compliance obligations in Greece and across the globe. Sovos uniquely combines local excellence with a seamless, global customer experience.

South Korea's Long Standing e-Tax Invoice System

South Korea E-Invoices

South Korea introduced its Electronic Tax Invoice System i.e. e-Tax in 2010. Since 2011, this has become a mandatory e-invoicing requirement alongside the obligation to report e-tax invoices shortly after issuance. This requirement means South Korea has a continuous transaction controls (CTCs) reporting obligation. The scope of the mandate has been expanded to cover more taxpayers, however the initial workflows and requirements of the mandate have remained relatively stable.

E-invoicing in South Korea has been mandatory for all corporations since 2011 and for individual taxable persons when exceeding a certain turnover threshold.

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Mandate quick facts

  • Mandatory e-invoicing with CTC reporting model: An issued e-tax invoice must be transmitted to the National Tax Service (NTS) within one day of the invoice being issued
  • Invoice data is reported to the NTS in XML format
  • Invoices and amended invoices (credit and debit notes) are in scope
  • E-invoicing in South Korea applies to domestic transactions only. Cross border transactions are out of scope

Mandate rollout dates

  • January 2011: The electronic issuance of VAT invoices and next day reporting became mandatory for all Korean corporate taxpayers
  • January 2012: : In addition to the first category, sole proprietors with a supply value of 1 billion KRW and above must issue e-tax invoices
  • July 2014: The threshold changed from 1 billion KRW to 0.3 billion KRW and above
  • July 2019: Introduction of the tax-free portion of the income to be included when calculating the threshold of 0.3 billion KRW
  • July 2022: The threshold was updated from 0.3 billion KRW to 0.2 billon KRW and above
  • July 2023: The threshold will be updated from 0.2 billion KRW to 0.1 billon KRW and above

Penalties

Penalties vary between 0.3-1% of the supply price based on the failure type e.g. non-issuance, issuance form, delayed issuance, non-transmission, late transmission.

INFOGRAPHIC

South Korea CTC Requirements

Understand more about South Korea’s continuous transaction controls including when businesses need to comply and how Sovos can help.

Good to Know

Yes, VAT is South Korea’s consumption tax and is charged on virtually everything sold throughout the country.

Yes, e-invoicing in South Korea is mandatory for all corporations and for certain individuals with supplies over a certain amount.

VAT is charged on all supplies of goods and services. There are some exemptions and also zero-rated supplies of goods and services.

Here’s further information about some of the countries within Asia that require e-invoicing.

How Sovos can help

As countries around the globe digitize their tax systems to close VAT gaps, our experts continually monitor, interpret and codify these changes into our software, reducing the compliance burden on your tax and IT teams.

Discover how the Sovos solution is tailored to manage all e-invoicing and related VAT obligations in South Korea.

MEXICO E-INVOICING

Mexico has one of the oldest and most complex sets of electronic invoicing regulations in the world.

For more than a decade, Mexico has been a pioneer in electronic invoicing. The country’s clearance-model e-invoicing mandate is extremely comprehensive and therefore fraught with risk. 

Businesses simply cannot operate in Mexico without a complete e-invoicing system capable of integrating and automating all of the fiscal requirements (invoices, e-payments, COMEX, e-accounting) within their ERP systems.

Latest Changes

Complemento de leyendas supplements for virtual importation of product components (for example, tyres on cars or sugar in soda) are now required for maquiladoras, or American-owned factories operating across the Mexican border.
The process for cancelling a CFDI, or e-invoice, changed in November 2018 and requires suppliers to submit a cancellation request instead of credit notes to void a previously issued invoice/CFDI . In addition, it requires the buyer to accept or reject the request within 72 hours
The frequently used supplement of payment, which affects all transactions where a partial or complete payment is received after a CFDI is issued, took effect in September 2018.

Mandate Quick Facts

  • Clearance-model mandate requires government sign-off on each transaction in real time
  • Supplements, or complementos, with additional information about a transaction accompany e-invoices depending on the type of transaction
  • Electronic invoices must have a digital signature to authenticate the integrity of the invoice

Penalties

  • $300-$4,602 fine per missing or incorrect e-invoice
  • $15-$4,092 fine per invoice that does not match accounting records (eContabilidad)
  • Up to $200 fine for each transaction that should have been posted in the delinquent or inaccurate polizas
  • Increased risk of a direct audit by the Mexican tax authority (SAT) for compliance errors
  • Adjusted taxable income based on presumption of unreported income, resulting in interest, penalties and fines on the delinquent taxes owed – often 80% to 100% of the imposed tax deficiency
  • Potential for operational shutdowns

How Sovos Helps Companies Stay Compliant with Mexico E-invoicing

The Sovos e-invoicing compliance solution serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Mexico and across the globe. Combining disparate local solutions in countries around the world is both costly and risky. The Sovos SAP Framework Solution is tailored to manage specific e-invoicing scenarios in Mexico as well as handling requirements in other countries around the world. It allows companies to invoice seamlessly within SAP and also monitors both AR, AP, and e-accounting compliance processes, end-to-end, all within SAP.

Automatic population of SAP tables

The Sovos e-invoicing solution for Mexico extracts and publishes data according to government mandates and maintains all data in SAP so that companies can manage information in one place and be prepared for audits.

Certified for Namespace and SAP with a path to S/4HANA

The Sovos embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth.

70+ OEMs

Sovos e-invoicing compliance solutions integrate seamlessly with Ariba, Coupa and many other payment solutions.
Free Guide

Electronic Invoicing and Reporting Requirements in Mexico

For more details on the evolution and requirements of the mandate, download the guide on e-invoicing in Mexico.

Feature list

Easily configure the e-invoicing processes.

Sovos provides SAP expertise in countries around the world, eliminating the need for SAP customers to find and provide experts themselves.

E-invoicing compliance solutions tailored to market-specific requirements and scenarios.

The embedded SAP solution enables AR and AP users to manage daily operations within SAP streamlining processes, maintaining SAP as the single source of truth. Sovos provides global reach with in-house regulatory expertise for both pre-clearance and post-audit transactional invoicing. When tax authorities introduce new or modify existing mandates, Sovos keeps track so SAP customers stay compliant, enjoy peace of mind and avoid business disruptions.

Functionality embedded in more than 60 leading global EDI and P2P networks, including SAP Ariba.

Sovos eInvoicing compliance works directly inside the most popular and most complex EDI and P2P systems, eliminating the need to fund and maintain expensive integration projects.

Change management function monitors and maintains the e-invoicing system.

Not only do SAP customers save money by not having to build internal SAP data extraction and mapping logics within SAP for their e-invoicing processes, they also don’t have to incur the significant costs of monitoring and maintaining those systems.

Reserved, native SAP namespace.

Built directly into SAP with its own namespace, the Sovos eInvoicing compliance solution delivers the tools SAP customers need to manage, control and monitor e-invoicing compliance processes in real time.