Innovation in Electronic invoicing

Two years ago, when publishing the previous note of this series, we expressed the view that tax administration would more frequently use electronic documents. Today, after the International Electronic Invoice Seminar for CIAT member countries, we can only confirm this trend.

Some innovations: Ecuador, Peru and Uruguay have started to use electronic invoicing. Colombia has a project to significantly improve its system so that, as in other countries, the tax administration will have the electronic invoices issued. In Central America, Guatemala is about to update its system, and Costa Rica is very close to start theirs.

In Chile, the first country in the region to implement an electronic invoicing system, until today its use is optional for taxpayers, but presently they are discussing a law to make it mandatory. In Ecuador, the system is now optional, but it is scheduled to become mandatory for March 2014, with large groups of taxpayers compelled to register in April, May and July 2014. In Argentina, important segments of taxpayers are required to use the electronic invoicing. They include, for example, all exporters with no exception, sellers of second-hand products, and some single tax payers.

In Brazil, where the system applies mainly to transactions between taxpayers, the number of mandatory registered issuers is close to one million. In Mexico, where there are already more than six hundred thousand issuers, the obligation is defined for all taxpayers, but the SAT has the option to regulate this obligation in time so presently all taxpayers with a gross income equivalent to $ 300,000 per year must have joined the system but the plan is to include all taxpayers with an annual income above 20 000 dollars per year. It is expected that by 2015 there will be no more paper invoice issuers.

In Latin America, about fifteen billion electronic invoices have been issued to date. Most of them are held by tax administrations, and were authorized by the tax administrations before being issued.

For these reasons, the development of an international electronic invoicing system by CIAT is an important move. The International Electronic Invoicing (FEI in Spanish) about which the CIAT has created a working group, would be mainly used for international transactions. The first challenge in this project is to not attempt to define a mandatory standard format. Among the countries that have implemented a national system, only Peru and Guatemala adopted an international standard, the first using the one proposed by OASIS and the second, with variations, the model proposed by GS1. The others countries have their own format, very extensive in the case of Brazil or Chile, or with fewer mandatory elements but with annexes for specific industries, such as in Mexico. We have chosen to define the FEI as an envelope containing a minimum set of common fields to be extracted from the original invoice, as a header; the invoice, as it was generated in the country where it was issued, and the electronic signature on the envelope.

The following step was to conceive a central node, with a messaging purpose, which allows notifying the parties about the issuing of invoices and the important events related to them, but which would not require the issuing of FEI. The invoices would only be exchanged between tax and customs administrations of the countries of origin and destination. The messages allow participants to notice that there is something for them.

The prototype was presented at group meeting in Panama City and we hope that soon we will start a pilot operation involving three countries.

In addition to the topic of the mandatory use of electronic invoices, there are other interesting elements to discuss. For example, the free use of applications is very successful in various countries. A very high amount of invoices are made by using a software provided by the Administration Web Site, as in Argentina, Chile or Peru, or through applications that are downloaded and run within the taxpayer’s environment such as in Brazil or Ecuador. In Mexico there are 62 free applications for issuing and sealing invoices.

In Chile, the use of credit card payment by the final consumer in specific operations is being studied, for example in restaurants, as payment slips.

Meanwhile, seven Brazilian states have started a pilot electronic tax slip for the final consumer. It is a synchronous mechanism for online electronic invoicing, without specific hardware. This solution which, according to its designers, require only an Internet connection and the right equipment, would allow small businesses with a computer, a tablet or a smartphone to sell and invoice with the tax administration’s authorization at the time of the sale, and possibly paying with a credit or debit card. This solution, without specific hardware, would allow increased invoicing check points at times of high demand with little effort and without delay; or in street vending, or in a taxi, if it were subject to the obligation; or directly by the seller or service provider in a “Apple Style” store. There is no doubt that the benefits of this scheme over tax printers will stimulate the debate. It will maybe even open a space for its mandatory use in these segments.

Most probably, the next innovations to be reported, and I hope in no less than a two years’ time, will focus on the use of the invoices, their results, the techniques of “Big Data”, XBRL and electronic accounting.

Good day and good luck

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