When it all began….
Around 15 years back, some countries started asking tax payers to notify them on “issued invoices” using web services. The process was simple, and many niche payer companies appeared in the market offering integration and security mediation to allow tax payers to “clear” their invoices before sending to their customers.
At that time there was one single touch point with the business process, and a simple web service was helping achieve the technical integration to make the magic rather easily.
Let me tell you something, those days are gone. Today electronic compliance is everywhere, and differs not just from country to country, but also on a vertical basis per industry and state, province, municipality and even city level.
How local taxes are regulated is very diverse in nature, even for VAT, that tends to be pretty generic, there are variations from country to country. At technical level some countries defined specific tags to report taxes and many others exploited the benefits of UBL 2.1 that allowes generic tax specification on material or service level.
Another dimension is the tax payment withholding mechanism, which is also very diverse and tax offices are also requesting a copy.
Furthermore, the exact business activity that determines the obligation is not consistent either, while in some countries VAT calculation is based on invoices, some other countries consider the payments for that, triggering additional compliance processes.
At this moment it is pretty clear that the architectural approach needs to be open in scope, flexible in nature and last but not least, end-to-end governance is a must. No hidden calculation, transformation, etc. should take place.
Challenges for the governments:
Now let’s try to understand where tax offices come from.
Evasion, side economy and triangular invoicing
Asking for invoice registration was a good first approach, but also fake invoicing is still possible for situation when fiscal credit surplus exists, thus it is also required to validate that the goods are moved or services executed.
Along similar lines, it is required to provide transport security and for that any goods transport (delivery/shipment) must have the appropiate delivery note and bill of lading if required.
Peppol is also promoting the standarization of B2B from the ordering perspective, some regional states are starting to request orders to be transfered using it.
If all the other reasons where not enough some countries started to define services to handle invoices as financial instruments, so that smaller companies can improve their cashflow if needed.
In most countries governments define regulations and expect the results, based on tax payers feedback, new versions are issued, currently some countries have up to 2 changes por month.
At this point we could state:
- Business documents compliance is not just about “invoicing” anymore, complete business processes are affected.
- Regulations could generate low, medium and even high impact on tax payers processes beyond the technical integration.
- Approaching document compliance from “interface” perspective could lead to endless integration projects with umpredictable costs, integrity problems, and hidden inconsystencies.
Something is clear, today business documents compliance is an integral part of the core business process and the solution approach as well. The world has changed and SAP evolved from technical “clearing” processes attached to the ERP application to an open, robust, framework based solution, integrated into invoicing, deliveries, shipments, material movements, sundry invoicing, ordering, payments, and who knows what comes in the future….
Thousands of companies worldwide are running their compliance processes using SAP Document Compliance realtime in a seamless, consist and safe way. Join the SAP Document Compliance journey!
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