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The issue of compliance

Governments receive as much as 30% of their Gross Domestic Product (GDP) from VAT and sales tax revenues and it isn’t surprising that tax collection is a serious matter. From government controlled systems in Latin America through to explicit guidelines in Europe, any company looking to implement eInvoicing must understand that each country has its unique set of regulations and maintaining regulatory compliance on an ongoing basis is one of the key challenges for invoicing.

While B2B efficiencies can be captured through EDI, companies looking to leverage tax compliant e-Invoicing must be aware of the government requirements that need to be adhered to in all of the countries in which their company does business. VAT requirements are significant and vary considerably. Depending upon the location of the buyer or supplier, regulations may require any or all of the following:

Differing regulations for electronic invoicing

For any company trading internationally, this means dealing with a wide range of differing legislation and regulation. For example:

If your company fails to meet the various country-specific requirements, it can lead to sanctions, including fines and repayments. You should be aware that the sanctions can be very severe, for example, the entire deducted VAT amount over a number of years may have to be repaid. When VAT and sales tax can account for as much 25% of the price of a product or service this could be very damaging to any business.

Don’t let eInvoicing compliance stop you

While regulatory compliance can seem to be complex, confusing and ever-changing, it is important not to lose sight of the benefits or let that complexity prevent you from moving your paper invoices to eInvoices. This first step of replacing paper with eInvoices alone will save you money and have the added benefit of bringing you a step closer to compliance.

However, at the same time, you shouldn’t underestimate the time it can take to move to electronic invoicing. For a large multi-country eInvoicing project, if half of your invoicing is performed electronically within two years it should be considered a success.

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