Latin America – Going After Cross-Border Tax Evasion with the Cloud & Big Data
As Latin America continues to lead the globe in innovations in mandated electronic invoicing, a new agreement among Argentina, Brazil and Mexico addresses one of the key challenges of these requirements – namely, cross-border transactions. Mandated e-invoicing has helped these governments increase their tax revenues significantly by adding visibility into corporate transactions. However, that visibility may be lost when companies purchase supplies from a vendor in another region or sell its products outside of the country – increasing the risk of fraud or unreported transactions. Now, the tax authorities in three countries are trying to close this loophole and gain added visibility into the entire supply chain – even the portions outside of their primary jurisdictions.
Traditionally, each country enforcing e-invoicing has its own set of procedures and requirements –requiring certain fields, naming conventions, transmission processes, etc. Now, under an agreement in partnership with the Inter-American Center of Tax Administrations (an international membership association that provides specialized assistance for the modernization of tax administration and encourages international cooperation), Argentina, Brazil and Mexico are unifying certain portions of their processes to simplify cross-border visibility.
Under the Factura Electrónica Internacional, these three countries will utilize a set of common fields that will be extracted from the original invoice, including an electronic signature. The system will interact with the e-invoicing structures of all participating countries, providing a unified view (“Central Node”) of all transactions. The new system will help to ensure that each country’s tax authority has knowledge of the invoices and receipts transmitted, without having to manage separate systems or risk missing transactions.
This international trade agreement represents a pilot program among the three CIAT member countries, and is expected to expand to other member countries once it is fully implemented, including Chile, Ecuador, Peru, Colombia and Uruguay.
As countries throughout Latin America and the globe continue to expand their e-invoicing requirements and examine cross-border transaction processes, it’s more important than ever to look for a regional compliance partner that truly understands the impact of each local mandate on your global business.