Asia-Pacific: Status of e-Invoicing and Electronic Tax Reporting
From Japan to New Zealand, the APAC region is accelerating the implementation of e-Invoicing requirements with new legislation and adoption schedules in both B2G and B2B. In the global market, this is no longer a trend but a reality driving companies to reinvent and update themselves to respond to growing tax compliance needs and requirements.
Billentis' latest report estimated that the global e-Invoicing market in 2019 was worth €4.3 trillion and predicts it will reach approximately €18 trillion by 2025. The report also predicts that most Asian countries will have established the Clearance e-Invoicing model by 2025. This model involves sending invoices or invoice data in real time to the corresponding tax authorities.
The costs associated with the incorrect generation of e-Invoices are one of the main reasons for the delay in the payment of invoices in the B2B environment. According to an Atradius survey, this was the reason for 21.2% of delays in the Asia-Pacific region. Virtually all of these errors can be avoided using an integrated and automated e-Document exchange method. By automatically integrating and extracting information from the ERP, structured documents are generated for real-time delivery to the appropriate recipients.
All these changes involve modifying and adapting processes, management, systems, and operations at the core of the companies. They are all moving towards new internal business and organizational models, leading to a profound digital transformation.
According to André Menezes, International Sales Manager at EDICOM, "APAC has a similar roll out as Europe in the adoption of eInvoicing at a national level in many countries. They have definitely followed best practices from regions like Europe and LATAM (pioneer region), and clearly we see that reflected on their eInvoicing models that follow usual practices for invoice generation (XML and JSON), quite standard clearance model, and combined APIs for its transmission."
Implementing e-Invoicing solutions involves modifying and adapting processes, management systems, and operations at the core of companies. However, in the Asian region, companies must overcome certain particular challenges.
"We have faced scenarios in which most of our clients are multinational companies with strong presence in APAC. A global service provider as EDICOM is a must to reduce implementation efforts, and to maintain the compliance process up to date over the time. Even on complex scenarios in which tax intermediation services are required, the fact that they can count on a single provider to orchestrate their needs represents a huge benefit on having a single end to end process and seamless global eInvoicing integration", says Fritz Hu, Global Account Manager at EDICOM.
There are several countries in APAC that have acted as pioneers and have shown significant growth in the use of e-invoicing. F. Hu points out that "South Korea is a pioneer country in the region, combined with Taiwan as well, with quite consolidated models. Vietnam has definitely growing and improving their e-Invoicing framework clearly moving to a national standard. Other countries as Australia, New Zealand, and Singapur adopted the European model (Peppol) with solid plans to make massive the adoption in the B2B and B2G sphere. Other new countries are gradually growing its massive adoption as Indonesia, and Thailand. China has also gradually put in place its national platform with committed plans to make it mandatory on a national level as well."
The most widely implemented e-Invoicing flow in the APAC region consists of near real-time reporting and an authorization system to obtain government validation before exchanging invoices.
These Are the Countries Where e-Invoicing or VAT Reporting Is Already Mandatory
Japan: As of January 2021, EIPA (E-Invoice Promotion Association) and the Japanese government have been working together with OpenPEPPOL to develop a Japanese standard that meets the country's legal and business requirements. The basis of the Japanese model is PINT, the international version of Peppol based on BIS Billing 3.0.
South Korea: E-Invoicing started in South Korea in both B2G and B2B in 2011 and gradually expanded. As of 2014, all taxpayers whose sales exceed KRW 300,000,000 (USD 264,500) annually must issue their VAT invoices electronically in real time. As of July 1, 2022, the threshold will be reduced to KRW 200,000,000 (about USD 160,000), and as of July 1, 2023, the threshold will be reduced to KRW 100,000,000 (about USD 83,000).
Taiwan: As of January 2021, any company, both foreign and domestic, with a business license in Taiwan is required to invoice electronically. The eGUI system considers the use of e-Signatures on invoices, and they must be sent to the Ministry of Finance platform no later than 7 days after they are issued.
The e-Invoice in Indonesia is called e-Faktur Pajak. The mandatory implementation was done in two stages: as of July 1, 2015, the obligation came into effect for taxpayers in Java and Bali, and as of July 1, 2016, for taxpayers in other regions of Indonesia.
Kazakhstan started with the implementation of e-Invoicing in 2016. The government provides taxpayers with a central platform (EIIS) to validate invoices and distribute them to recipients.
India: The GST e-Invoice/IRN System is India's e-Invoicing system, launched on a mandatory basis on October 1, 2020. There is a gradual implementation schedule. As of April 1, 2022: Companies with sales turnover of more than Rs. 20 crores in the last fiscal year.
These Are the Countries Where It Is Not Yet Mandatory
Vietnam had planned to start with the obligation in 2020, but exceptional circumstances caused by the pandemic have postponed the initial date. Now, all taxpayers who currently issue paper invoices will be required to issue e-Invoices as of July 1, 2022.
Thailand: In Thailand, e-Invoicing is voluntary. The Thai government has not yet published any legislation regarding the deadlines for making it mandatory.
Australia: For the time being, it is only mandatory for Commonwealth agencies, which must adopt e-Invoicing no later than July 1, 2022. However, Australia is also preparing to implement e-Invoicing in the B2B sector. For this purpose, it has launched a public consultation on adopting e-Invoicing among companies. The consultation is called Business eInvoicing Right (BER) and means that all companies that are prepared to receive invoices in Peppol format can ask their partners to send them invoices in this same format. The objective of the BER initiative is to extend the use of e-Invoicing among companies.
In New Zealand, central government agencies must receive invoices in electronic format as of March 31, 2022. Companies will need to contract a certified Peppol Access Point to be able to exchange e-Invoices.
The Philippines is moving forward with implementing the new e-Invoicing System, Electronic Invoicing System - EIS. The Bureau of Internal Revenue (BIR), responsible for the project, has announced that it will come into effect as of July 2022, making e-Invoicing mandatory for the 100 largest taxpayers in the country.
Global e-Invoicing Platform
EDICOM offers its international e-invoicing platform that complies with the regulations in force in many APAC countries for e-invoicing, as well as participating in some pilot projects for countries that have just started to implement the e-invoicing system, such as the Philippines and Japan. "EDICOM’s platform is synonym of global centralized eInvoicing solution. They delegate to EDICOM the compliance complexity, from its implementation to the maintenance over the time. It is a real 100% managed service approach offered that along the years our clients have drastically reducing costs and efforts in implement global eInvoicing and to rapidly respond to business and legal changes", says F. Hu.
Some of the many benefits are:
- Single global platform
- Single development for our clients
- Single Process
- 100% Managed Services
- Proactive and anticipated change management both for business and new legal requirements
- Experience and know how counts on this kind of initiatives and Edicom has more than 25 years’ experience on it.
- In the edge of innovation on technologies that improve deployments, hyper-automation, and autonomous operation of the centralized platform.