Compliance Services
There is a global explosion of invoicing and purchase order legislation (government mandates) creating one very big challenge for business. How do you stay compliant cost effectively and avoid expensive fines for non-compliance?
The latest updates from around the world
Commission initiative to amend administrative cooperation
Combatting VAT fraud is a major concern for EU Member States, but also the European Commission who oversees and administers e-invoicing policy.
To this effect, the Commission plans to amend existing EU rules on administrative cooperation and combating fraud in this field, with the aim to equip tax administrations with adequate tools to strengthen their capability in this department. It has requested feedback until 3 August 2023 via the following link:
Electric energy invoice update
Brazil’s e-invoicing system differs significantly from other countries, and arguably can be said to have one of the most challenging tax systems in the world.
Brazil’s tax topography is complicated, typically hosting a different e-invoicing format for different services. For example, Brazil holds a different invoice format specifically for energy services, also referred to as NF3-e.
This month, via an official publication in the Diario Oficial da Uniao), Brazil has delayed the mandatory implementation of the NF3-e in line with the following:
- 1 June 2023: Minas Gerais
- 1 October 2023: Espirito Santo
- 1 January 2024: Santa Catarina
- 1 June 2024: Sao Paulo
These changes took effect on 17 May 2023, with the date of their publication present in the Diário Oficial da União (DOU).
You can refer to further e-invoicing developments in Brazil on our dedicated country-specific page here.
E-invoicing obligations for further taxpayers
Bolivia’s e-invoicing phased implementation drive continues apace, with a new wave of taxpayers now obliged to adhere with Bolivia’s e-invoicing requirements.
The Servicio de Impuestos Nacionales, or Bolivia’s National Tax Service, via RND No. 102300000019, have instructed a fifth wave of taxpayers to comply with e-invoicing regulations.
The obligation will come into effect on 1 August 2023 and instructs specific taxpayers to issue digital tax documents via the online billing modality.
The annex in the resolution identifies impacted taxpayers, and brings Bolivia closer to concluding e-invoicing in the country as the new wave of taxpayers will now be expected to abide by the Sistema De Facturacion Electronica(SFE) obligations.
VAT in the Digital Age (ViDA) potential implementation delay
Last month, the ECOFIN conference exposed various concerns around the VAT in the Digital Age (ViDA) proposal.One of the enduring contentious points relates specifically to the timing of the proposal.
The European Parliament has issued a proposal to the European Commission, outlining its intention to delay each pillar of ViDA by 2 years.
This is supplemented by other concerns raised in response to the proposal. In total, the European Parliament has proposed 251 amendments in a draft report.
More information on the proposed amendments are available on the EU website:
https://www.europarl.europa.eu/doceo/document/ECON-AM-749001_EN.pdf
The European Commission will, in turn, need to consider the proposed revision to its original schedule.
The ViDA proposal will have radical implications for e-invoicing and e-reporting (BLOG LINK INSERT) over the next decade. Its significance cannot be underestimated. To this effect, Kofax is closely monitoring developments in respect of the ViDA proposal and will keep you informed of the same.
Business Payment Coalition (BPC) update – Remittance Delivery Validation Report
If e-invoicing developments in the European Union are taking pace, equally significant developments in the US are also shaping the e-invoicing curvature in the country.
The Business Payments Coalition (BPC) has announced that the Remittance Delivery Work Group recently completed a validation phase where the group successfully demonstrated the operational feasibility of an exchange framework to deliver electronic remittance (e-remittance) information.
Given the success of the validation phase, the working group is now logically touting moving to a pilot phase, supporting all electronic B2B payment methods. Consequently, the BPC, with support from the Federal Reserve, will soon proceed with facilitating an E-remittance Exchange Pilot.
The following article will provide greater insights into the operations of the validation phase and the overall aims associated with the proposed pilot:
The pilot represents an exciting development for the BPC, and more widely for the exchange of electronic B2B payments in the US. Kofax is closely following developments in respect of the pilot and will keep you informed of the same.
Proposal for reduced rates for recyclable products
Last month saw the Czech Republic approach the European Commission to reduce the VAT rate on recycled products. While the European Commission has afforded EU Member States increased freedom to dictate some VAT rates, notably, this still eluded recyclable products.
In line with much of the domestic legislation established by EU Member States, this initiative showcases the European Commission’s intention to endorse policies that can benefit wider environmental concerns. The draft is currently only at proposal stage, but growing environmental consciousness strongly suggests there will be support for the motion.
Kofax will closely monitor any reduced rates introduced in direct response to the proposal and ensure if not already present that they are incorporated as part of our e-invoicing solution.
Major fiscal reforms
Our recent post commented on the political changeover in Brazil. As is often the case, political shifts correspond with significant fiscal adjustments, as new governments seek to assert their own agendas on the wider economic framework.
True to promise, the new government in Brazil appears to be preparing to implement major fiscal changes in the country that look set to permanently alter the fiscal circuit in the country.
The reforms, expected to take place from 2026, will merge the current five levies in the country into a value-added tax (VAT) with separate federal and regional rates.
In a long-term indication of Brazil’s ambitious plans, tax will be determined from where goods are consumed as opposed to where they are produced, stretching over a 50-year transition period commencing from 2029.
The tax reforms are radical and will inevitably spawn debate in the Senate. Currently, the reform has been approved by the Lower Congress, and will now be sent to Senate for a definitive conclusion.
Kofax will monitor further updates in respect of the same.
South America is currently hosting some exciting e-invoicing developments in the region- you can read more about these here.
New government plans on transition to real-time economy
Finland’s response to e-invoicing and the wider digitisation of its fiscal procedures has been more muted when compared to its European counterparts. However, the Finnish government has strongly hinted at the expansion of its tax infrastructure via introducing a real-time platform economy.
More specifically, this trajectory would relate to the transfer of company documents, including e-invoices, in a digital form in a secure manner.
Currently, the plans are not so fully fledged as to suggest that B2B e-invoicing will be mandated in the country, nor have any concrete timeframes been confirmed in this regard. However, it confirms that the digital transfer of e-documents is a significant preoccupation for EU Member States which is likely to heavily influence country policy and legislation.
Please refer to further information in respect of the same here:
Finland has also recently commented on its support for the VAT in the Digital Age proposal, indicating that the country is leaning towards further digitisation and automation of its wider fiscal infrastructure.
FA(2) final publication & legislative process update
The Polish XML schema, containing more than 300 fields, is undeniably more complex compared to its European XML equivalents. This complexity has predictably rendered itself to multiple versions of the schema. In June 2023, the Polish Ministry of Finance finally published the final version of the FA(2) logical structure for e-invoices.
No other modifications are planned before the mandatory KSeF comes into force on 1 July 2024.
Kofax is still awaiting final technical specifications regarding Poland’s e-invoicing mandate, but these are not materially expected to change the content of the FA(2) structure. While the legislative process regarding the same is expected to conclude by July 2023, final specification publication is expected slightly later, in Q4 2023. Kofax will analyse these once available and assess system impact.
The FA(2) structure is expected to replace the current FA(1) structure on the production environment as of 1 September 2023. In the KSeF test environment, it will be available from 1 July 2023 (in parallel with the currently used FA(1) until the end of August 2023).
Initial indications suggest that the final version of FA(2) does not differ significantly from the earlier, draft version of the FA(2) structure, published in late spring. Multiple wider Kofax teams have been analysing the FA(2), with a view to determine how we can support these fields.
Further information with respect to the FA(2) can be located on the Polish Ministry of Finance website:
https://www.gov.pl/web/finanse/ksef—zaktualizowana-wersja-wzoru-struktury-fa2
Kofax is committed to supporting the upcoming e-invoicing mandate in Poland. You can read more about Poland’s e-invoicing mandate here.
Revised timeline for B2G e-invoicing
Slovakia’s B2G e-invoicing timeline has always been subject to some revision.
Once again, the Slovak government has instilled some changes to its proposed B2G e-invoicing roll out, in line with the following:
- Q3 2023 – Ministry of Finance of the Slovak Republic and Datacentrum and its suppliers
- Q4 2023 – Budget organizations of the Ministry of Finance of the Slovak Republic, including the Financial Administration of the Slovak Republic
- Q1 2024 – Other government and public administration entities.
It is important to note that these dates are not yet official and we must be cognizant of the fact that Slovakia has revised its e-invoicing timelines previously. Kofax will keep abreast of developments.
You can read more about e-invoicing in Slovakia on our dedicated e-invoicing page here.
German mandate
Indian mandate