Electronic Invoicing in Asia-Pacific
Countries in the APAC region have made a strong commitment to transforming their economies using new technologies. This is evidenced by many recent projects meant to overhaul tax systems by digitizing fiscal documents, like electronic invoices, by the end of 2021.
According to the latest Billentis report, the use of electronic invoicing is estimated to grow by 11% this year in the B2B2G area, and 7% in the B2C APAC market.
Compliance Trends in Asia – 2021
Asia is in the midst of a technological revolution. One indicator of the region’s digital acceleration is its ranking in the United Nations EGDI Index, which evaluates the maturity of e-government policies. For the first time in history, Asia is ranked second only to Europe.
Among the e-government policies being employed by the larger economies in the region, tax digitalization using electronic invoicing systems stands out.
Although the use of e-invoicing has a long tradition in countries like South Korea, it is currently expanding at its fastest rate in history throughout the region. Following Latin America’s example, Asian governments are opting to phase in mandatory electronic invoicing rules according to companies’ invoicing volume.
For example, Taiwan and India completed the implementation of electronic invoicing this year. Since January, the use of the Electronic Government Uniform Invoice – eGUI has been mandatory for any company operating in Taiwan, whether foreign or domestic. This milestone was reached after a two-year rollout process. In India, taxpayers joined the GST e-invoice/IRN System in several phases, the latest ending this February with companies reporting over rs25 crore annual turnover. The Goods and Services Tax Council (GSTC) aims to extend its use to all taxpayers in the future.
In Vietnam, the rollout of electronic invoicing is scheduled to be completed by July 1, 2022. All organizations, companies, and individuals providing goods or services in the country will have to issue electronic invoices after that date.
But China is the country that will undoubtedly experience the greatest changes at the compliance level in 2021. Due to its prominence in the international market, mandatory e-invoice reporting in China will impact many domestic and foreign companies. Implementation of the e-fapiao (the Chinese e-invoice) for private companies is expected to take place this year.
At the moment, only B2C e-invoices can be declared, but by the end of 2021, companies should also be able to declare B2B invoices. It is a large-scale, ongoing project and we are still waiting for the Chinese government to confirm when it will be possible to declare all types of e-invoices.
Other countries that look set to implement e-taxation this year include Japan and the Philippines, according to Billentis.
At the southern end of the Pacific, Australia has also included e-invoicing in its recovery plans, opting for a more European approach. For the time being, any company that wishes to do so can invoice electronically. The government has set July 1st, 2022 as the deadline for mandatory adoption by all public agencies. Australia has chosen to use the European PEPPOL network for communication between companies and public administrations. To encourage the adoption of e-invoicing, the government is offering incentives like guaranteed 5-day payment for suppliers who send electronic invoices through PEPPOL. Companies and administrations are expected to begin adapting their systems to comply with the new requirement this year.
Compliance Trends in the Middle East and the Persian Gulf – 2021
Several countries in the Middle East and the Persian Gulf are introducing e-invoicing and e-vat reporting rules. Following in Egypt's footsteps, Saudi Arabia has decided to implement e-invoicing as of December 4th. Jordan has also announced its intention to implement an e-invoicing system later this year.
For many years, Latin America and Europe have led global electronic invoicing and VAT reporting projects. However, Asia and the Middle East are the regions making the most drastic changes these days. Although the majority of Asian countries are basing their efforts on following well-known e-Procurement models like those in Italy and Mexico, each country is developing its own unique system. This is why multinationals need to pay special attention to comply with the new requirements.
