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 standard 12% VAT rate.
In addition to periodic VAT filing obligations, the Philippines has launched a Continuous Transaction Controls (CTC) e-reporting pilot program to improve VAT collection. It is also expected to roll out a phased expansion of this VAT control reform to the rest of the economy soon.
This page is your ideal overview for VAT compliance in the Philippines.
Monthly: 20th day of the month following the end of the tax period
Quarterly: 25th day following the close of each taxable quarter
VAT rates
12%
0% and Exempt
VAT rules in the Philippines
In the Philippines, VAT filings are due monthly or quarterly.
When filing monthly, submissions must be made no later than the 20th day following the end of the taxable month. When filing quarterly, submissions must be made no later than the 25th day following the end of the taxable quarter, aligned with the taxpayer’s income tax quarter.
Requirements to register for VAT in the Philippines
There are several qualifying factors for taxpayers who must register for VAT in the Philippines. These conditions include:
Organisations or individuals involved in selling, leasing, exchanging goods or properties and rendering services (if gross sales amount to 3,000,000 PHP)
Organisations or individuals who voluntarily register
Organisations or individuals that import goods
Penalties for non-compliance with VAT in the Philippines
If you fail to meet your tax obligations in the Philippines, you may be fined 1,000 PHP per instance of failure. However, this can be avoided if the failure is proven to have been caused by reasonable cause and not by neglect.
Taxpayers cannot be charged more than 25,000 PHP in tax-related fines in a year. However, additional penalties, such as surcharges and interest, may also apply depending on the nature of the non-compliance.
Solutions for VAT compliance in the Philippines
Meeting tax obligations in the Philippines may seem complicated, but it doesn’t have to be. Choose Sovos as your compliance partner to save time and gain peace of mind that your requirements are being met.
Sovos combines solutions with regulatory expertise, serving as an extension of your team to make sure you are compliant – not just now, but in the future too. Get in touch today to get started.
Tourists or non-resident passport holders can apply to reclaim VAT in the Philippines on goods bought from an accredited store, if goods are taken out of the country within 60 days of purchase, and goods purchased worth at least 3,000 PHP.
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.
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 mandatory, it has been widely accepted in B2C instances for several years. It is mandatory in certain core service-based industries, including telecommunications and public transportation. Invoices are issued via the national system, and the hardware and software are 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.
Format of electronic invoices in China
Electronic invoices take different forms in China. The document is automatically sent to the State Taxation Administration in XML format, and it is returned to the invoice issuer in either PDF or OFD format.
All e-invoices must include a QR code and an electronic signature, buyer and seller information, an invoice number and issuance date, details for the goods or services provided and financial information (unit price, tax rate & amount, etc).
Yes, China began its pilot program for electronic invoicing in September 2020 – specifically for B2B transactions in Ningbo, Shijiazhuang and Hangzhou.
The ZRE stands for Zentrale Rechnungseingangsplattform des Bundes, which translates as Central Invoice Submission Portal. ZRE is a web portal that allows suppliers and service providers to send electronic invoices to federal entities.
ZUGFeRD is a hybrid e-invoicing format that includes human-readable (PDF/A-3) and machine-interpretable invoice data. It’s based on XML, allowing invoices to be sent as attachments or embedded within an email.
ZUGFeRD meets the requirements of the European standard (EN 16931).
XRechnung is a standard for electronic invoicing that the German government accepted in late 2020. It was devised as a standard for converting invoice information into an XML data file, serving as an e-invoice.
XRechnung also meets the requirements of the European standard (EN 16931).
B2G e-invoicing has been mandated at a national level since mid-2019, meaning that all Member State government agencies must be able to receive and manage electronic invoices.
Elsewhere, here’s the timeline for B2B e-invoicing in the country:
From January 2025, all German taxpayers must be able to receive electronic invoices from their suppliers.
From January 2027, all German taxpayers with an annual turnover of over EUR 800,000 must issue electronic invoices.
From January 2028, all German taxpayers must issue and receive electronic invoices.
When transacting with federal contracting authorities, you should send an electronic invoice through the relevant state’s individual transmission platform.
Timeline of e-invoicing adoption in China
Learn more about China’s journey to adopting electronic invoicing with the key dates below.
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 digitised e-invoice”, a new type of e-invoice that simplifies the e-invoice issuance for both B2B and B2C purposes
December 2024: The State Taxation Administration officially recognises e-invoices with the same legal weight as paper invoices
Unlike many other country initiatives that we have seen in the e-invoicing space recently, Australia does not seem to have any immediate plans to introduce continuous transaction controls (CTC) or government-portal involvement in their B2B invoicing.
Judging from the recent public consultation, current efforts are focused on ways to accelerate business adoption of electronic invoicing. This consultation builds on the government’s previous outreach undertaken in November 2020 on “Options for the mandatory adoption of e-invoicing by businesses”, which led to a serious government effort to enhance the value of e-invoicing for businesses and increase business awareness and adoption.
In addition to a decision to make it mandatory for all commonwealth government agencies to receive PEPPOL e-invoices from 1 July 2022, the Australian government seeks to also boost e-invoicing in the B2B space, but without the traditional mandate for businesses to invoice electronically. Instead, the proposal is to implement the Business e-Invoicing Right (BER).
What Is Business E-invoicing Right (BER)?
Under the government’s proposal, businesses would have the right to request that their trading parties send an e-invoice over the PEPPOL network instead of paper invoices.
To make and receive these requests, businesses need to set up their systems to receive PEPPOL e-invoices. Once a business has this capability, it would be able to exercise its ‘right’ and request other companies to send them PEPPOL e-invoices.
According to the current proposal, BER would be delivered in three phases, with the first phase to include large businesses, and the later stages to include small and medium-sized businesses. The possible rollout of BER would be as follows:
From 1 July 2023: All businesses would have the right to request PEPPOL e-invoices from large businesses. Large businesses would have a legal obligation to provide PEPPOL e-invoice on receipt of a valid request.
From 1 July 2024: All businesses would have the right to request PEPPOL e-invoices from medium-sized and large businesses. Medium-sized and large businesses would have a legal obligation to provide PEPPOL e-invoices on receipt of a valid request.
From 1 July 2025: All businesses would have the right to request PEPPOL e-invoices. All covered businesses would have the legal obligation to provide PEPPOL e-invoices on receipt of a valid request.
Further measures to support e-invoicing adoption
The objective of the Australian BER initiative to boost the adoption of B2B e-invoicing is complemented by a proposal for several other initiatives supporting businesses in this direction. One measure would be the enabling of PEPPOL-compatible EDI networks. As EDI networks represent a barrier to broader adoption of PEPPOL e-invoicing, particularly for small businesses that interact with large businesses that use multiple EDI systems, the proposal to enable PEPPOL-compatible EDI networks could ultimately reduce costs for businesses currently interacting with multiple EDI networks. Furthermore, the government is contemplating expanding e-invoicing into Procure-to-Pay. Businesses may realise more value from adopting e-invoicing if the focus grows to embrace an efficient and standardised P2P process that includes e-invoicing.
Finally, integrating e-invoicing with payments is another proposed means to boost e-invoicing. This would allow businesses to efficiently receive invoices from suppliers directly into their accounting software and then pay those invoices through their payment systems.
How efficient the proposed measures will be in accelerating adoption of e-invoicing, and whether the Australian government will feel it was the right decision not to introduce a proper e-invoicing mandate, as is becoming more and more common globally, remains to be seen.
Take Action
Need help staying up to date with the latest VAT and compliance updates in Australia that may impact your business? Get in touch with Sovos’ team of experts today.
Many multinational companies find VAT compliance challenging, especially when trading cross-border.
With the increase in real-time reporting across Europe and differing VAT registration and reporting requirements, VAT compliance now requires significant resources and specialist knowledge to ensure compliance and avoid costly penalties.
As your business expands, so do your VAT obligations. This is why many organisations, turn to managed service providers to ease the burden of VAT compliance, audits and fiscal representation.
This e-book discusses the many elements of VAT compliance including:
VAT registration
Fiscal representation
How to determine VAT obligations
Filing VAT returns
Preparing for an audit
Managing VAT changes
VAT compliance advice from JD Sports’ Indirect Tax Manager
How JD Sports manage VAT compliance with Sovos’ Managed Services
John Dowd, Indirect Tax Manager at sport-fashion retailer JD Sports discusses how he managed cross-border VAT compliance with the help of Sovos’ managed services
“For us at JD Sports and me personally I’m looking for a partnership, something long term, as it takes time and costs money to change advisors. I’m looking for a long-term relationship over a number of years with a VAT service provider.
“I want my advisor to have specialist knowledge, for us that’s retail and cross-border supply chains, overseas tax authorities, and I want to see new talent joining the team. I prefer a single point of contact to make it easier to move things along and of course, competitive pricing, and Sovos ticked all of these boxes for us.”
John Dowd, Indirect Tax Manager at JD Sports
The many elements of VAT compliance
VAT compliance has many elements, beginning with an understanding of place of supply rules to determine where VAT registration is required. Fiscal representation might be required to register in EU Member States.
Once VAT registration is underway, the next step is to determine EU VAT obligations by mapping the supply chain for the country of registration. There are also additional requirements to consider including exemptions, recovering VAT, Intrastat and varying continuous transaction controls (CTCs) mandates.
Submitting VAT returns to ensure compliance is a never-ending process. Each country has its own VAT return regulations and additional declaration requirements.
The VAT compliance cycle also includes preparation for VAT audits. Tax authorities can carry out audits for a variety of reasons so it’s important businesses prepare for audits and ensure they are able to manage the process successfully.
How Sovos VAT Managed Services can help with VAT compliance
Sovos’ end-to-end, technology-enabled VAT Managed Services can ease your compliance workload and mitigate risk where-ever you operate today, while ensuring you’re ready to handle the VAT requirements in the markets you intend to dominate tomorrow.
During the last decade, the Vietnamese government has been developing a feasible solution to reduce VAT fraud in the country by adopting an e-invoice requirement for companies carrying out economic activities in Vietnam. Finally, on 1 July 2022, a mandatory e-invoicing requirement is scheduled to enter into force nationwide.
2020 e-invoicing mandate postponement
Despite the postponement of the original starting date for the mandatory nationwide e-invoicing obligation, which was first intended to enter into force in July 2020, the Vietnamese government quickly established a new deadline.
Later that year, in October 2020, the new timeline was communicated through Decree 123, delaying the e-invoicing mandate until 1 July 2022. This new deadline is also in line with the implementation dates for the rules concerning the e-invoicing system envisaged in the Law on Tax Administration.
Ongoing regional readiness plan
Vietnam’s General Taxation Department (GTD) announced its plan to work first with the local tax administrations of six provinces and cities: Ho Chi Minh City Hanoi, Binh Dinh, Quang Ninh, Hai Phong and Phu Tho to start implementing technical solutions for the new e-invoice requirements and the construction of an information technology system that allows the connection, data transmission, reception, and storage of data. According to the GTD’s action plan, by March 2022, these six cities and provinces should be ready for the e-invoice system’s activation.
The GTD announced that, from April 2022, the new e-invoicing system will continue to be deployed in the remaining provinces and cities.
Finally, under this local implementation plan, by July 2022, all cities and provinces in Vietnam must deploy the e-invoicing system based on the rules established in Decree 123 and the Circular that provides guidance and clarification to certain aspects of the new e-invoicing system.
Next steps for businesses
Taxable persons operating in Vietnam will be required to issue e-invoices for their transactions from 1 July 2022 and must be ready to comply with the new legal framework. Enterprises, economic organisations, other organisations, business households and individuals must register with the local tax administration to start using e-invoices according to the rules established in the mentioned Decree 123.
Vietnam is finally moving forward to adopt mandatory e-invoicing. However, there is plenty of work related to the necessary technical documentation and local implementation of the new e-invoicing system. We will continue to monitor the latest developments to determine whether the GTD can meet all the requirements in time for the mandatory e-invoicing roll-out.
Take Action
Need help staying up to date with the latest VAT and compliance updates that may impact your business? Get in touch with our team of experts today.
The Tax Bureaus of Shanghai, Guangdong Province and Inner Mongolia Autonomous Region have all issued announcements stating they intend to carry out a new pilot program for selected taxpayers based in some areas of the provinces. The pilot program will involve adopting a new e-invoice type, known as a fully digitized e-invoice.
Introduction of a new e-invoice type
Many regions in China are currently part of a pilot program that enables newly registered taxpayers operating in China to voluntarily issue VAT special electronic invoices to claim input VAT, mostly for B2B purposes.
The new fully digitized e-invoice is a simplified and upgraded version of current electronic invoices in China. The issuance and characteristics of the fully digitized invoice are different from other e-invoices previously used in the country.
Characteristics of the fully digitized e-invoice
The fully digitized invoice is supervised by the local Taxation Bureaus as part of the pilot program
The legal effect and basic purpose are the same as those of existing paper invoices
Fully digitized invoices can be delivered in the form of data messages, which eliminates specific format requirements such as PDF or OFD
The basic content includes dynamic QR code, invoice number, invoice date, buyer information, seller information, quantity, unit price, amount, tax rate, tax amount, total, total price, and tax
After the pilot program taxpayer has passed a “real-name verification” they can immediately use the electronic invoice service platform to issue invoices without the need to use special equipment for tax control (e.g., UKey device)
Pilot taxpayers can automatically deliver fully digitized invoices through the tax digital account of the electronic invoice service platform and can also deliver fully electronic invoices themselves via email or other means
Verification of fully digitized e-invoices
Relying on the national unified electronic invoice service platform, tax authorities will provide selected taxpayers for this pilot program with services such as issuance, delivery, and inspection of fully digitized e-invoices 24 hours a day. Taxpayers will be able to verify the information of all electronic invoices through the electronic invoice service platform or the national VAT invoice inspection platform.
What’s next for e-invoicing in China?
This new pilot program has been effective in Shanghai, Guangzhou, Foshan, Guangdong-Macao Intensive Cooperation Zone, and Hohhot since 1 December 2021. Despite the lack of an official timeline for implementation, it’s expected that the scope of this pilot program will be extended in 2022 to cover new taxpayers and regions in China, paving the way for nationwide adoption of the fully digitized e-invoice.
Many tax authorities are increasing their focus on the insurance industry in an effort to close tax revenue gaps, with many introducing Insurance Premium Tax (IPT) and other indirect taxes for insurance. Globally, IPT is fragmented across over 200+ countries and achieving compliance can be a complex process requiring specialist knowledge.
Insurers, especially those operating across multiple territories, can find keeping up to date with the latest IPT rates, rules and regulations to ensure compliance challenging.
This guide provides a helpful snapshot of the indirect tax rules that apply to insurance premiums across Europe.
The guide provides a useful reference of indirect rules across Europe including:
Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaca, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Switzerland, United Kingdom.
Insurance Premium Tax compliance
The digitization of tax is a trend that will undoubtedly continue. Organisations need to prepare for any changes to reporting as this will impact compliance obligations for the countries they operate in.
Tax authorities have increased their focus on the insurance industry to ensure IPT and parafiscal taxes are collected correctly, accurately, and on time.
Operating in multiple countries inevitably means also having to comply with many local regulations in line with IPT statutory and parafiscal filing. Compliance regimes can be simple or complex, but the difficulty is that they’re varied.
Welcome to the 13th edition of Sovos’ annual Trends report where we put a spotlight on current and near-term legal requirements across regions and VAT compliance domains.
This report provides a comprehensive look at the regulatory landscape as governments across the globe are enacting complex new policies to enforce VAT mandates. It examines the demanding and unprecedented insight now required into your economic data so that regulatory authorities enforce standards and close revenue gaps.
This year’s report examines the evolution of law and practice around the four emerging megatrends that Sovos experts identified in the 12th edition. These trends, many of which revolve around tax compliance and controls being ‘always on’, have the potential to drive change in the way organizations approach regulatory reporting and manage compliance.
Authored by a team of international tax compliance experts, we provide extensive recommendations on how companies can prepare for and thrive through these changes.
Get the report
The four mega-trends that we examine are:
Continuous Transaction Controls (CTCs) – Countries with existing CTC regimes are seeing improvements in revenue collection and economic transparency. Now, other countries in Europe, Asia and Africa are moving away from post-audit regulation to adoption of these CTC-inspired approaches. The report highlights how countries like France and Hungary have accelerated their transition to CTCs, and how many jurisdictions are combining invoice controls with CTC transport documents, thereby expanding their real-time reach from financial to physical supply chains.
A shift toward destination taxability for certain cross-border transactions – Cross-border services have historically often escaped VAT collection in the country of the consumer. Due to a large increase of cross-border trade in low-value goods and digital services over the past decade, administrations are taking significant measures to tax such supplies in the country of consumption or destination.
Aggregator liability – With the increase of tax reporting or e-invoicing obligations across different taxpayer categories, tax administrations are increasingly looking for ways to concentrate tax reporting liability in platforms that naturally aggregate large numbers of transactions already. Ecommerce marketplaces and business transaction management cloud vendors will increasingly be on the hook for sending data from companies on their networks to the government, potentially even inheriting liability for paying their taxes. The report notes how the July 2021 introduction of sweeping changes in e-commerce VAT legislation via OSS and IOSS are confirming this trend.
E-accounting and e-assessment – Combining CTCs with obligations to synchronize entire accounting ledgers makes onsite audit necessary only in cases showing major anomalies across these rich data sources. Over time, the objective is for VAT returns and other tax reports to be prefilled by the tax administration based on taxpayers’ own, strongly authenticated source system data. A brief deep-dive into the origins and potential future of SAF‑T shows how this trend is evolving to become a solid companion to CTCs globally.
CTCs have emerged as the primary concern for multinational companies looking to ensure compliance despite growing diversity in VAT enforcement approaches. Tax authorities are steadfast in their commitment to closing the VAT gap and will use all tools at their disposal to collect revenue owed. This holds especially true in the aftermath of COVID-19, when governments are expected to face unprecedented budget shortfalls.
The potential costs and risks associated with the trends highlighted in the report cannot be effectively mitigated with a reactive or opportunistic approach. The digital transformation of tax administration can – if approached as just an evolution of the legacy ‘post audit’ VAT world – significantly contract the digital transformation of businesses. This report suggests an analysis framework that companies can use to ensure ongoing VAT compliance whilst maximizing the opportunities of modern information and communication technologies for their own benefit.
In addition, Trends includes a major review of the country and regional requirement profiles. These profiles provide a snapshot of current and near-term planned legal requirements across the different VAT compliance domains.
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 introduced an e-invoicing regime with a phased approach in December 2021. Having only introduced VAT on 1 January 2018, the country is already leading the way in digitizing tax compliance in the Gulf Region.
According to the finalised rules published by Saudi Arabia’s tax authority, Zakat, Tax and Customs Authority (ZATCA) the go-live date of the second phase is 1 January 2023.
In addition to other requirements, Phase 2 also introduced 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: Started 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 both Phases 1 and 2. Documents can be stored on Cloud, a direct link to the online data must be available. In case the storage is outsourced, documents must be kept by a third party established within the territory of Saudi Arabia.
Suppliers must store e-invoices in a structured format regardless of how they’re exchanged with buyers.
Certain prohibited functionalities for e-invoicing solutions.
Phase 2 – CTC regime: Started on 1 January 2023, requiring taxpayers to transmit e-invoices in addition to electronic notes to tax authority ZATCA for clearance
A phased implementation approach based on taxpayers’ revenue.
Voluntary participation in Phase 2 before the taxpayer’s enforcement date arrives.
B2B invoices operate under a clearance regime, while B2C invoices must be reported on 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) 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 for e-invoicing in Saudi Arabia
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 and electronic notes to the ZATCA. It will be a phased adoption starting with larger companies, with more gradually coming into the scope of the mandate. Companies can expect six months’ notice before 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.
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.
Under India’s Goods and Services Tax (GST) framework, the country’s e-invoicing system falls under the category of continuous transaction controls (CTCs). India’s electronic invoicing mandate currently includes B2G and B2B transactions.
While the system has now been in place for a number of years, familiarisation and optimisation are not simple. This page aims to help, providing everything you must now about the e-invoicing system in India –bookmark it to stay on top on any future changes.
The obligation to report invoice data to the governmental portal, the Invoice Registration Portal (IRP), is a mandatory step before an invoice can be issued.
The legal validity of the invoice is conditional on the IRP, which digitally signs the invoice and provides an Invoice Reference Number (IRN). If the IRN is not included in an invoice, the document will not be legally valid.
India’s e-invoicing 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.
Electronic invoices must be securely archived for eight years.
Format of electronic invoices in India
Firstly, all e-invoices must be submitted to the nation’s invoice portal in JSON format. From there, the IRP will generate the IRN, include it in the JSON, and sign the file. The IRP will also generate the QR code data which can be used to generate a QR code.
Like with paper invoices and other nations’ versions of e-invoices, India has strict requirements for the information included on electronic invoices issued by businesses.
Required information includes:
Unique invoice number
Buyer and seller details
Issuance date
Description of goods and/or services
Quantity, price and total amount
Tax details (e.g. amount payable).
Timeline of e-invoicing adoption in India
India’s journey to implementing e-invoicing began in 2020 and is still ongoing. Here are the key dates and developments:
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.
1 August 2023:Threshold lowered to taxpayers with an annual threshold of Rs. 5 Crore.
September 2024: GST Council recommends pilot rollout for B2C e-invoicing following a successful implementation of e-invoicing for B2B transactions.
1 October 2024: The Invoice Management System is launched on the Goods and Services Tax portal.
Penalties: What happens if I don’t comply with e-invoicing in India?
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.
Issuing electronic invoices is mandatory for domestic companies in India that surpass the annual threshold of Rs. 5 Crore, specifically for B2B, B2G and export transactions.
An electronic invoice, or e-invoice, is a digital version of the traditional paper invoice that is submitted and transferred online. Many countries now mandate the electronic issuance of invoices, including India.
All companies established in India that surpass the Rs. 5 Crore threshold must issue electronic invoices when selling to businesses and government entities.
Setting up e-invoicing in India with Sovos
The initial specifications published by the Indian tax authority in December 2019 had already been revised three times by February 2021. 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.
South Korea was one of the first countries to adopt e-invoicing, introducing e-Tax, its Electronic Tax Invoice System, in 2010. E-invoicing in South Korea has been mandatory for all corporations since 2011, and the scope of the mandate has expanded over time.
Bookmark this page to stay up to date with the latest requirements.
South Korea’s e-invoicing system consists of two processes: e-invoice issuance and e-invoice transmission. The combination of e-invoice and real-time reporting mandates is relatively unique to South Korea.
Taxpayers must issue e-invoices and exchange with counterparties via email. Following the exchange, e-invoices need to be reported to the National Tax Service (NTS).
South Korea’s NTS requires transmission of e-tax invoices to the government portal within one day of an invoice being issued.
E-invoices must also be issued to the recipient of goods or service subject to VAT via email. Invoices and amended invoices, including credit and debit notes are in scope of the requirements. Currently, e-invoicing in South Korea applies to domestic transactions only.
Penalties are based on failure type (e.g. non-issuance, issuance form, delayed issuance, non-transmission, late transmission etc.) and vary between 0.3-1% of the supply price.
Format of electronic tax invoices in South Korea
Network
NTS Central Platform
Format
XML
eSignature Requirement
E-invoices should be signed using the supplier’s digital signature certificate; only certain types of certificates can be used for this purpose. Taxpayers can use either a certificate issued by the Public Certification Authority or an e-tax certificate issued by the NTS.
Archiving Requirement
Suppliers are required to store invoices for five years, but since e-invoices are stored in the NTS system and accessible to both suppliers and buyers, they are released from this obligation. However, it is recommended to keep copies in case of issues with the NTS system or fiscal disputes with tax authorities.
Timeline of e-invoicing adoption in South Korea
January 2011:Electronic issuance of VAT invoices and next day reporting becomes mandatory for all South Korean corporate taxpayers
January 2012:Mandate now includes entrepreneurs with a supply value of 1 billion KRW and above
July 2014:Threshold for entrepreneurs reduces from 1 billion KRW to 0.3 billion KRW and above
July 2019:Inclusion of tax-free portion of income when calculating the 0.3 billion KRW entrepreneur threshold
July 2022:Entrepreneur threshold adjusts from 0.3 billion KRW to 0.2 billon KRW and above
July 2023:Introduction of self-billing invoices and further entrepreneur threshold reduction from 0.2 billion KRW to 0.1 billon KRW and above
July 2024: The threshold for entrepreneurs to issue e-invoices has been lowered from 0.1 billon KRW to 80 million KRW and above
How Sovos helps with e-invoicing requirements in South Korea
As countries around the globe digitize their tax systems to close VAT gaps, e-invoicing requires a nuanced approach our experts continually monitor, interpret and codify these changes into our software, reducing the compliance burden on your tax and IT teams.
Sovos can be your single-vendor tax compliance partner, helping you handle e-invoicing and related VAT obligations in South Korea and wherever else you do business.
For companies operating in Turkey, 2019 was an eventful year for tax regulatory change and in particular, e-invoicing reform. Since it was first introduced in 2012, the e-invoicing mandate has grown, and companies are having to adapt in order to comply with requirements in 2020 and beyond. Turkey’s digital transformation and e-invoicing landscape continues to evolve.
According to the General Communique on the Tax Procedure Law (General Communique), more taxpayers now need to comply with the mandatory e-invoicing framework. The General Communique published on 19 October 2019 covers other e-documents such as e-arşiv, e-delivery note, e-self-employment receipts, e-producer receipts, e-tickets, e-note of expenses, e-Insurance Commission Expense Documents, e-Insurance Policies, eDocument of Currency Exchange, and e-Bank Receipts.
The scope of e-invoicing
From 1 July 2020, taxpayers with a gross sales revenue of TL 5 million or above in fiscal years 2018 or 2019 must switch to the e-invoice system. Taxpayers who meet these requirements in 2020 or later, should switch to the e-invoice system at the beginning of the seventh month of the following accounting year.
Mandatory e-invoicing is not only based on the threshold
Turkey’s tax authority has set some sector-based parameters for businesses operating in Turkey. Companies licensed by the Turkish Energy Market Regulatory Authority, middlemen or fruits or vegetable traders, online service providers facilitating online trade, importers and dealers are some of the taxpayers also required to switch to e-invoices, irrespective of their turnover.
The scope of E-Arşiv invoice
E-arsiv fatura documents B2C transactions. But also in case the transacting counterparty is not registered with the TRA for e-invoicing. Similar to e-invoice, the e-arşiv invoice, became mandatory for intermediary service providers; online advertisers; and intermediary online advertisers who switched to the system from 1 January 2020.
Taxpayers not in scope for e-invoice and e-arşiv must issue e-arşiv invoices through the Turkish Revenue Administration´s portal. That is if the total amount of an invoice issued, including taxes, exceeds:
TL 5.000 for B2B
TL 30.000 for B2C transactions.
Turkey’s Government continues to tackle its VAT gap through digital transformation. By taking greater control of reporting and requiring more granular tax detail. So, businesses operating in Turkey need powerful e-invoicing strategies to comply with the growing demands for digital tax transformation.
With two weeks to go until the first mandatory phase of the Indian e-invoicing reform go live, the GST Council slammed the breaks. Or at least, bring it to a significant temporary standstill of 6 months. As a result, the India e-invoicing reform is now postponed until 1 October 2020
Following a long list of complaints — both from the private sector toward the GST Council, as well as from the GST Council vis-á-vis the IT infrastructure provider that powers the GST Network, Infosys — the council decided to revisit the 1 April go-live in a recent meeting held today, Saturday 14 March.
Delaying the first mandatory go-live of the e-invoicing reform with six months, from 1 April 2020 until 1 October 2020
Delaying the obligation for B2C invoices. Those issued by the largest taxpayers in India, with a threshold above Rs.500 Crore. This is to include a QR code, from 1 April 2020 until 1 October 2020
Excluding certain types of taxable persons from the scope of the e-invoicing reform
The obligation to generate QR codes. For example, insurance companies, banks, and other financial institutions. Also non-banking financial institutions, and passenger transportation services
Postponing the entry into force of the new GST returns until 1 October 2020
Calling the chairman of Infosys to attend the next three GST Council meetings. This is for the purpose of reporting status updates of technical and infrastructure improvements to the underlying IT platforms that are the foundation of the on-going GST control reforms
The decisions made in the 39th meeting of the GST Council will require either that the legislative framework (Notifications) published in early December be amended or entirely replaced with new ones to reflect the new reality. However, it wouldn’t be unreasonable to expect even further delays to the roll out of this reform. This given to the recent economic volatility triggered by the ongoing pandemic. Only once both global markets as well as the underlying technical platforms of the GST control reform seem to stabilize will the post-October timeline of the roll out be fully certain.
In Turkey, the Revenue Administration (TRA) published the long-awaited e-Delivery Note Application Manual. The manual clarifies how the electronic delivery process will work in addition to answering frequently asked questions. It addresses the application as well as its scope and structure, outlines important scenarios and provides clarity for companies who are unclear about the adoption of e-delivery notes.
What is the e-delivery note application?
The e-delivery note is the electronic version of the “delivery note,” currently printed on paper. As a result, it allows the TRA to regularly monitor the movements of delivered merchandise in the electronic environment.
Electronic delivery has the same legal qualifications as the delivery note but is issued, forwarded, retained, and submitted digitally.
Who does the e-delivery note mandate affect?
According to the circular published by the TRA at the end of February, taxpayers in scope of the e-delivery note application are;
E-invoice taxpayers with a gross sales turnover of 25 million TL and above
Companies with an Energy Market Regulatory Authority (EPDK) license (including dealers) -PCT I
Motor vehicles (production, import, dealers) – PCT III
Mining license owners in addition to producers of mine based on their contracts with these people
Sugar manufacturers
Iron and steel manufacturers / HS Code72 / HS Code73
Users registered in the fertilizer tracking system
Taxpayers engaged in fruit and vegetable trade as brokers or merchants
Also, those who are found to be risky or at low levels of tax compliance as a result of the Administrative analysis
Taxpayers engaged in fruit and vegetable trade as brokers or merchants completed their transitions of January 1, 2020. Other taxpayers covered by the mandate must be ready by July 1, 2020.
Taxpayers deemed to be risky or at low levels of tax compliance by the TRA must complete their transition to the e-delivery note application within three months after being notified.
Other topics included in the e-delivery note application manual
Besides explaining the basic concepts, the manual also details the previously announced scenarios providing answers to many areas that were confusing for taxpayers.
The main scenarios are:
Delivery notes to be issued for the buyers not registered in the e-delivery note application
Export and logistic scenarios
Successive delivery
Issuing a printed delivery note
Various customers
In addition, other topics covered include:
Market registry system
Fuel oil sector
Transportation by pipelines
Sample and contract manufacturing processes
Full details on the Turkey E-Delivery Application Manual are available in Turkish from the TRA e-Document website.
Is India postponing the mandatory implementation deadline for e-invoicing? For more than a year, India has been on the path to digitizing tax controls, with the first mandatory go-live for transmission of invoice data to a governmental portal scheduled for 1 April 2020. The very high pace of the roll-out of this reform made many taxpayers concerned that they might not realistically be able to meet the implementation deadline. As a result, leading many to hope that the Indian authorities might instead chose to postpone the go live date.
The latest news from India is that it looks as if these authorities may indeed consider a delay. Or at least discuss the possibility of – a delay to the go-live date. According to The Economic Times, the Indian government is going to discuss whether there is a need to defer the implementation deadline in the next meeting of GST Council, which is scheduled for the 14th of March. So far, a 3-month deferral is an option. This means that should the GST Council grant a delay, the first go-live would take place in July 2020.
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For those following the ongoing tax control reform in India, 2019 has been a very eventful year for Indian e-invoicing. Starting last spring, a group of government and public administration bodies have convened regularly with the mission of proposing a new way of controlling GST compliance through the introduction of mandatory e-invoicing. Given the vast impact such a reform would have on not just the Indian but the global economy, these discussions, often carried out behind closed doors, have triggered a large number of rumours, sometimes leading to misinformation on the market.
Navigating the information deficit
So far, not much information of a formal or binding nature has been published or made available to the public. After the public consultation held earlier this autumn, a high-level whitepaper describing the envisaged e-invoicing process was published; however, since then nothing formal or binding has been released. A recent media note made available by the relevant authorities to the press indicated that the timeline envisaged by the government for the roll-out would be:
1 January 2020: voluntary for businesses with a turnover of Rs.500 Crore or more;
1 February 2020: voluntary for businesses with turnover of Rs.100 Crore or more;
1 April 2020: mandatory for both of the above categories and voluntary for businesses with a turnover of less than Rs. 100 Crore.
While the clarity was welcomed, this timeline was not yet binding, and as a result, taxpayers were left with little information on how to meet the requirements of the tax control reform, and no binding indication of when they need to comply. However, this situation is now currently being remedied, and we are seeing the first codification into law.
The first pieces of legislation make an entrance
On December 13, 2019, a set of Notifications (No. 67-72/2019) introducing amendments to the existing GST legislation framework were released and are currently awaiting publication in the Gazette of India. In a nutshell, these Notifications:
Introduce the principle that an invoice is only considered as valid if it contains an Invoice Reference Number (IRN), and failing to issue it according to the envisaged process means that it cannot be considered as an invoice;
Formalise the first mandatory part of the roll-out plan: introducing the obligation to comply with these requirements by 1 April 2020 for companies with a turnover of Rs.100 Crore or more;
Introduce an obligation for businesses with a turnover of Rs.500 Crore or more to include a QR code on B2C invoices as of 1 April 2020.
These Notifications issued on December 13 will be the first of many pieces of documentation that are needed to formally clarify the details of the upcoming e-invoicing reform. More important still, they serve as a clear indication that the relevant Indian authorities are nearing the end of what has been an analytical and consultative design period, and that they now instead are transitioning into a period of preparation for the first roll-out.
Following India’s recent public consultation looking at the proposed introduction of an e-invoicing regime, the GST council has now released a white paper on the architecture of the new framework and also provided answers to a number of outstanding questions.
From 1 January 2020, taxpayers in India can start to use the new e-invoicing framework, which relies on connectivity to the GST system for reporting of all B2B invoice data. The first part of the roll-out starting from this date will be voluntary for businesses. It will only become mandatory at a later stage, the timing of which is still to be communicated by the relevant authorities.
The new e-invoicing system, considered to be not only a tax reform but also a business reform, has two key aims:
To ease the process and format of standard reporting between taxpayers and the authorities.
To prevent tax evasion by monitoring all B2B invoices and taxes involved within the transactions.
Under the e-invoicing system, taxpayers will be obliged to create the e-invoice in the structured JSON format and transmit it to the Invoice Registration Portal (IRP). The IRP will then check the e-invoice according to the requirements of the schema and determine if a duplicate record is already registered on the GST system.
After this check, the IRP will digitally sign the e-invoice, assign a unique number – the invoice registration number (IRN) – to the invoice and create a QR code, before submitting the invoice to the GST system. The QR code will help to authenticate the e-invoice by the seller and buyer and to confirm that the invoice is successfully registered in the GST system. Connection to the portal is needed to see all the e-invoice data and to view all the details online. A digital signature by the taxpayer is not mandatory, but it is permitted before submission to the IRP.
An IRN can also be generated by the seller with the required parameters, which would then be validated by the IRP and transmitted to the GST System if it meets the predefined criteria.
Once the e-invoice has been cleared by the IRP, it will be transmitted to both the seller and the buyer by email.
Taxpayers can use several methods to connect to the IRP including web, API, SMS, mobile app, offline tool or GSP based.
The IRP keeps the e-invoices for just 24 hours as its main function is to validate and assign the IRN. Invoices submitted to the GST system will be archived for the whole financial year by the GST system and taxpayers must keep the IRN for each invoice to ensure compliance.
The new system will simplify the preparation of Goods and Services Tax (GST) returns by auto-populating the returns with the data from the e-invoices. The GST System will update the ANX-1 of the seller (sales registers) and ANX-2 of the buyer (purchase register).
Data from the e-invoice will also be used as a basis to populate the current e-waybill (auto-generation of Part-A), where only the vehicle registration number will need to be added in Part-B of the e-waybill.
Whilst the white paper has provided some guidance for businesses ahead of the introduction of this e-invoicing framework, there are still some grey areas to be addressed in the coming months, including the timeline for submitting e-invoices.
