Expert Knowledge on Digitalization & Automation of Business Processes
Expert Knowledge on Digitalization & Automation of Business Processes
Electronic invoicing is changing the landscape of business transactions and taxation practices wherever it has become a mandate. To see its most interesting developments, we can look to Asia, which, according to Swiss consultancy Billentis, has proven to be the largest growth market at present. Interestingly, though Europe is the birthplace of the leading E-Invoicing standard worldwide, some Asian countries have taken the lead in the extent to which they actually implement an E-Invoicing standard, making them ideal models for Western countries to look to when considering which aspects of E-Invoicing are relevant and helpful.
Though the types of strategies implemented in Asia vary greatly, implementation of the European-grown Peppol standard is becoming increasingly prevalent. The international association OpenPeppol supports this growth by offering different methods of data transfer, which enables national governments to tweak the standard format to accommodate local requirements.
E-Invoicing mandates are government-driven, based on motivations such as improved fiscal consistency and uniformity in accounting through systems of continuous transaction control. Additionally, E-Invoicing brings business efficiency which, in turn, has an economy-boosting effect, both in the public and in the private sector. The benefits are to be felt not only by governments, but by businesses as well, in improvement of taxation procedures and increases in transparency throughout B2G and B2B invoicing practices. And as many companies are poised to revamp old systems, simplification of procedures is another key aspect motivating them to move onboard.
We have put together a run-down of the major developments in East Asia, Southeast Asia and the Southern Hemisphere, in approximate order of progress in implementation, starting with countries that are still in the planning phase and ending with those that already have a full-blown system in place.
In Malaysia, the introduction of an E-Invoicing standard has been the subject of discussion for some time. While an initial strategy is already in place, more detailed information on technical implementation is not to be found. What is clear is that companies will initially be permitted to decide for themselves whether to transmit their invoices electronically.
While companies in many countries are even required to send their outgoing invoices as E-Invoices, in Thailand it is a matter of receiving permission, and only selected companies have received it. Only if certain requirements are met (minimum size, etc.) may E-Invoices be sent in the B2B context. Thailand's long-term plan is to simplify paperless invoicing for businesses.
Australia and New Zealand
Australia and New Zealand officially introduced E-Invoicing in 2019. Both countries use the Peppol network and extend it with data fields that accommodate their local requirements. Over the course of 2022, the Trans-Tasman countries will require B2G and B2B invoices to be E-Invoices. As an incentive to jumping on the E-Invoicing bandwagon, both countries are guaranteeing prompt payment for improved cashflow, with Australia setting the payment deadline to 5 business days, and New Zealand to 10.
In contrast to many neighboring countries, Japan did not announce its intention to introduce an E-Invoicing standard until recently. Japan will be joining the crowd and basing its system on the Peppol network. The Japanese EIPA (E-Invoice Promotion Association) is aiming to enable exchange of electronic invoices by July 2022.
In the Philippines, an E-Invoicing pilot program is to be launched in 2022, with a nationwide rollout a year later. Technically, the E-Invoicing system will be based on the same portal technology, e-Tax, as in South Korea (see below).
Vietnam is also currently in the throes of implementing its own E-Invoicing strategy, known as GDT (E-Invoicing). Starting in July 2022, GDT will be mandatory, and all companies will be required to issue and process all invoices digitally for all transactions carried out in Vietnam.
India began implementing a nationwide E-Invoicing mandate called GST E-Invoicing in 2021 and is in the process of extending the scope of its mandate. Businesses must first upload their outgoing invoices to a central portal. After verification of invoice data, a barcode is generated and must be applied to the invoice to the customer. The goal of the E-Invoicing standard is to ensure that companies remit their taxes in proper form.
The Asian E-Invoicing leader South Korea introduced their strategy for E-Invoicing, e-Tax, as early as 2011. Since then, companies have been required to submit their outgoing invoice data to a central portal so that it can be captured and verified by the government. Only after this real-time reporting step is the invoice issued to the actual recipient.
The E-Invoicing standard E-Faktur Pajak has been in use in Indonesia since 2013. Before invoices can be sent to the customer, companies must transmit the data of outgoing invoices to the tax authority.
The E-Invoicing system used in China is called the Golden Tax System and applies to all companies doing business within China. Like the system in India, all invoice data is first transmitted to a central portal. The portal takes the data to generate a barcode with the relevant information. This barcode must appear on the outgoing invoice. In addition to the Golden Tax System, a new document format has been developed specifically for China, to become mandatory for companies in 2022.
Singapore has been using the European Peppol standard for several years. The use of E-Invoicing is currently voluntary but is being heavily marketed under the Invoice Now brand to encourage more companies to switch to E-Invoicing in a timely manner. Since July 2021, around 35,000 companies can send Invoice Now invoices, which in turn can be accepted and processed by all governmental agencies. In order to increase the focus on E-Invoicing, the country has created strong incentives. One of these incentives is financial support for large companies implementing E-Invoicing IT projects. They can receive grants of up to 150,000 Singapore dollars (equivalent to approximately 110,000 US dollars). Learn more about E-Invoicing in Singapore in this blog article.
This overview offers all evidence that many governments in Asia are deeply engaged in implementing E-Invoicing mandates. South Korea and Indonesia are even a step ahead of many European countries and already have several years of E-Invoicing experience to build on. E-Invoicing is relevant and will increase in relevance for anyone doing business with Asian companies.
As an officially confirmed "PEPPOL Ready Accounting Solution Provider", xSuite has been deeply involved in E-Invoicing projects in Asia and has supported a number of customers in introducing comparable solutions.