Embedded e-invoicing compliance, e-archiving and global tax determination will make procure-to-pay (P2P) platforms one-stop shop for the digital future of tax
April 2, 2019 – AUSTIN – SAP Ariba Live – Global tax software leader Sovos today announced it has extended its embedded tax compliance solution for cloud-based procurement platform users. For more than a decade, Sovos (via the acquisition of several leading tax technology companies and integrations into its core solution offering) has provided global e-invoicing and e-archiving compliance to most of the world’s leading procurement software and cloud services. By extending this support to global tax determination and various forms of complex e-invoice reporting, Sovos empowers businesses to work with their preferred software vendors for procurement and spend management, without having to worry about the ever-changing global tax digitization requirements that apply to accounts payable (AP) processes.
Continuous updates to the Sovos solution deliver clearance e-invoicing compliance in Italy, the latest European country to move to this regulatory model, and provide a single compliant e-archiving solution for businesses to use within their P2P platforms and across their entire financial application ecosystems. With full integration into its S1 cloud platform, Sovos now also paves the way for its comprehensive indirect tax compliance solutions to be seamlessly available in procurement processes around the globe.
“Many multinational companies are struggling with the shifting tax regulatory landscape,” said Kevin Permenter, research manager at IDC. “Sovos continues to innovate around procure-to-pay platforms, offering organizations tremendous value by providing coverage for every major form of transaction-level tax compliance in one solution.”
The digital transformation of VAT invoice controls
In 2018, Italy introduced the Italian Budget Law, requiring companies to submit and approve all domestic business-to-business and business-to-government invoices through the government’s exchange, giving the tax authority real-time visibility into transactions. The Italian government also requires strict compliance regarding the treatment and storage of invoices, making e-archiving a key component of tax strategies, as well. With similar requirements in some 20 countries around the globe and growing rapidly, these mandates are driving a new era of tax compliance.
“As VAT compliance and real-time transaction controls go through a digital transformation, tax has quickly shifted from an accounting problem to a technology problem,” said Christiaan van der Valk, vice president of strategy at Sovos. “Every financial process – from procurement to payment to delivery of goods – is being scrutinized like never before, and tax departments must adopt holistic strategies to thrive in this new environment, where tax administrations use locally varying requirements to tap directly into business-to-business data flows. That’s why a centralized solution that seamlessly deals with e-invoicing compliance, digital reporting, e-archiving and tax determination is critical to staying compliant worldwide.”
Solving tax for good in AP processes
With a decade of enabling customers to process e-invoices in compliance with complex European e-invoicing and e-archiving laws, Sovos adds simplicity to the growing global challenges of indirect tax compliance in AP processes. Customers can bring all their invoices together in the compliant Sovos eArchive, safeguarding their businesses with modern tax evidence in compliance with local e-archiving legislation.
Learn more about Sovos’ e-invoicing compliance and VAT reporting solutions by visiting https://sovos.com/solutions/ and at booth P5 at SAP Ariba Live in Austin.
Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern tax. As governments and businesses go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports 5,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.
Increasingly complex VAT regulations are sweeping across Europe and Latin America, demanding technology adoption to support compliance and reporting-related activities.
Now is the time for businesses to reevaluate their processes and technology
to ensure they can meet complex VAT compliance and reporting initiatives, tightly integrate with government
tax authorities, support real-time access to transactional data and adapt for the wave of change to come.
Spain’s Immediate Exchange of Information: At a Glance
On July 1, 2017, Spain’s SII – Immediate Exchange of Information – went into effect,
requiring businesses to adapt their processes and infrastructure to support this new real-time reporting mandate. Here’s a quick look at what companies with
operations in Spain need to know. Starting January 2018, the SII was expanded to the
Basque region and Navarra.
The Sovos Intelligent Compliance Cloud sits on a unique cloud software platform that is built to bring previously disparate tax solutions and data together for use wherever your business operates—through a single platform.
The S1 architecture allows Sovos to do the hard work for you, adapting to changes in technology requirements and government
regulations – and giving you access to the tools and data you need to run your business anywhere in the world through a consumer-grade user experience.
Sovos, a leading global provider of tax software, today announced it is recognized as a Leader in the inaugural “IDC MarketScape: Worldwide SaaS and Cloud-Enabled Sales Tax and VAT Automation Applications 2019 Vendor Assessment.” According to the newly released report, Sovos is ideal for “businesses in search of a sophisticated cloud tax software capable of supporting large, multinational tax and e-invoicing regulatory demands.¹” The IDC MarketScape report details Sovos’ depth and breadth of experience in e-invoicing compliance and also notes the company’s cloud infrastructure and support for customers in more than 60 countries as core strengths.
“Multinational companies are struggling with the shifting tax regulatory landscape,” said Kevin Permenter, senior analyst at IDC. “Sovos offers these organizations tremendous value by providing coverage for every form of transaction-level tax compliance in one solution. As a result of this differentiator, we expect Sovos to continue to expand its market presence.”
A complete solution on a reliable, scalable and secure cloud platform
The report highlights Sovos’ strong cloud software solution, the Sovos Intelligent Compliance Cloud, which is the world’s first complete solution for modern tax. It combines traditional tax determination and reporting tools for sales and use tax, VAT and other transactional taxes with modern, digital reporting and e-invoicing compliance software. The solution is supported by the company’s S1 cloud platform, which enables Sovos to do the hard work for businesses, handling their compliance across all financial systems, while supporting them with highly reliable, scalable and secure cloud infrastructure.
The world’s first global e-invoicing compliance solution
As governments around the world – from Brazil to Italy – race to close value-added tax (VAT) gaps, they are implementing various e-invoicing compliance models, a tax modernization system that requires companies to comply with indirect tax laws at the invoice level. These new requirements, which are often real-time, are pushing the digital transformation of every financial system.
According to the IDC MarketScape report, “multiple customers cited Sovos’ capability with e-invoicing compliance as one of the major benefits of choosing their solution.”¹ Today, Sovos eInvoice provides coverage to countries in Europe, Latin America, the Middle East, Africa and Asia Pacific.
As the report mentions, Sovos has aggressive growth plans. Over the past five years, the company has made eight acquisitions, which have propelled its footprint and coverage into 60 countries. With 12 offices spread across three continents, Sovos now safeguards more than 5,000 global customers that do business in the world’s most complex regulatory environments.
“Traditional tax software wasn’t built for today’s era of digital tax enforcement. In response, we’ve built a complete, modern cloud software solution that prepares businesses for a world where tax is part of every transaction,” said Andy Hovancik, president and CEO at Sovos. “We’re committed to helping our customers build tax into the digital financial core of their business where it belongs, so they can Solve Tax for Good and focus more time on growing their businesses.”
IDC MarketScape is the premier vendor assessment tool for the information and communications technology (ICT) industry. The report provides in-depth technology market assessments of ICT vendors for a wide range of markets. The comprehensive assessment of market competitors offers critical information needed to evaluate technology solutions.
Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern tax. As governments and businesses go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports 5,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.
About IDC MarketScape
IDC MarketScape vendor analysis model is designed to provide an overview of the competitive fitness of ICT (information and communications technology) suppliers in a given market. The research methodology utilizes a rigorous scoring methodology based on both qualitative and quantitative criteria that results in a single graphical illustration of each vendor’s position within a given market. IDC MarketScape provides a clear framework in which the product and service offerings, capabilities and strategies, and current and future market success factors of IT and telecommunications vendors can be meaningfully compared. The framework also provides technology buyers with a 360-degree assessment of the strengths and weaknesses of current and prospective vendors.
By Francisco de la Colina, Legal Counsel, TrustWeaver
Francisco de la Colina is a lawyer working on the regulatory team at Sovos TrustWeaver.
On 31 December 2018 a decree establishing certain tax benefits for the North Border Zones in Mexico was published in the country’s Official Journal. The benefits aim to bring some stimuli and competitiveness to taxpayers resident in the targeted area during 2019 and 2020 by reducing the rate of income tax (impuesto sobre la renta or ISR) and VAT tax rates. For VAT, the rate reduces from 16% to 8% on retail sales (digital sales do not fall under the scope of the benefit) by businesses where the purchasers are located in the same area. Imports and sales from the rest of Mexico to residents located in the area are subject to the standard 16% rate.
The targeted areas are the State of Baja California, and 38 municipalities located in the northern parts within the States of Sonora, Chihuahua, Coahuila, Nuevo León y Tamaulipas.
Before implementing the reduced rate, businesses should obtain the corresponding permission from the SAT. Businesses that do not obtain permission or that do not comply with the conditions set by the law, should continue to apply the 16% rate even if they are located within the border zone. Additionally, the tax authority will conduct inspections to control the fulfillment of the necessary requirements to use the fiscal benefit.
Because of the new VAT rate, the tax authority has issued the Sixth Resolution for Modifications to the Miscellaneous Resolution 2018 establishing rules applicable to CFDIs. Consequently, taxpayers profiting from the benefits must implement the new rules impacting the content of the CFDI.
While the decree was published on the last day of 2018, the new tax benefit applies straight away from January 2019. Because of the short timescales, the tax authority has provided a grace period for implementation. Therefore, taxpayers using the tax benefit who cannot comply with the new content requirement may defer the issuance of the CFDI until April 30 2019, providing all affected CFDIs are issued by 1 May 2019. Failing to comply with these deadlines will be sanctioned as non-compliance with the obligation to issue CFDIs. Buyers receiving CFDIs from suppliers who adhere to the tax benefit rules may obtain said CFDI by the 1 of May 2019.
Latin America Is Setting the Bar for Shared Services
Why Shared Services in Latin America is Fundamentally Different from the Rest of the World
As companies around the world look for ways to make shared services even more efficient, they should look toward Latin America, where government regulations are necessitating that companies set the bar for innovations.
As a result, shared service departments in Latin America are setting a new standard in automation, error reduction and efficiencies, making these departments a model for shared services centers worldwide.
On December 27, 2018, Council Directive (EU) 2018/2057 was published in the Official Journal of the European Union, and it will enter into force on the twentieth day following that date. It amends the EU VAT Directive (2006/112) to provide for temporary application of a generalized reverse charge mechanism (GRCM) relative to supplies of goods and services above a certain threshold. Specifically, a member state may, until June 2022, introduce a GRCM on non-cross-border supplies where the person liable for payment of VAT is the taxable person to whom all supplies of goods and services are made above a threshold of EUR 17,500 per transaction. Its purpose is to remove the opportunity to engage in carousel fraud by designating the taxable person to whom goods or services are supplied as the person liable for payment of VAT.
A member state wishing to introduce GRCM must meet the following conditions:
It had in 2014 a VAT gap of at least 5 percentage points above the Community median VAT gap
It has a carousel fraud level within its total VAT gap of more than 25%
It establishes that other control measures are not sufficient to combat carousel fraud on its territory
It establishes that the estimated gains in tax compliance expected as a result of the introduction of the GRCM outweigh the expected additional burden on businesses and tax authorities by at least 25%
It establishes that the introduction of the GRCM will not result in businesses and tax authorities incurring costs that are higher than those incurred as a result of the application of other control measures
A member state applying the GRCM must also establish appropriate and effective electronic reporting obligations.
Download Sovos TrustWeaver’s paper on the trends affecting global e-invoicing compliance
The 10th edition of this paper outlines in detail the global trend towards real-time tax ‘clearance’ of invoices and how this impacts businesses in their day-to-day operations and business-to-business transaction automation strategies.
Readers will also find a summary of the regulatory status for over 60 countries, as well as an in-depth analysis of the ways tax authorities around the world use e-invoices to increase collection rates.
Since the last edition, the trend towards compulsory transaction-oriented integration of e-business systems with public authorities has continued to accelerate. The growing consensus among e-invoicing and VAT professionals is that indirect tax controls are quickly evolving towards real-time whereby tax administrations essentially become a ‘third trading partner’ in the exchange of sales and purchasing data between suppliers and buyers.
Download this paper for our insight into how companies can ensure their push towards automation with tax administrations doesn’t end up fragmenting or even contradicting their digital transformation of business processes.
SAP® in Latin America: Top 10 Implementation Hurdles
Mandated e-invoicing and tax reporting requirements in Latin America make SAP implementations in this region more complex than anywhere else in the world. Here, we examine the Top 10 Hurdles to Implementing SAP in Latin America.
On November 1, 2018, Decree 119/2018/ND-CP took effect in Vietnam. Pursuant to this decree some businesses may be required to switch to e-invoicing upon notification by the tax authorities. However, e-invoicing will not be mandatory until November 1, 2020.
On November 6, 2018, the European Economic and Financial Affairs Council announced the adoption of a Council Directive which allows EU Member States to align their VAT rules for physical and electronic publications. Electronic publications are currently taxed at the standard VAT rate, while physical publications may be subject to reduced rates. With the adoption of this directive, EU Member States may now apply the same reduced rates to electronic publications. This has long been a contentious issue within the EU, with many Member States lobbying for the ability to align these rates. As previously reported, the European Parliament had voted to adopt the directive in 2017.
For more information, please find the directive here.
On October 26, the Polish Council of Ministers confirmed that it will introduce a new SAF-T scheme (JPK_VDEK) aimed at replacing the VAT-7 and VAT-7K declarations. The draft legislation will become available during the fourth quarter of 2018. If enacted, taxpayers will submit only one document, the JPK_VDEK file, without additional attachments. The Ministry of Finance has communicated that JPK_VDEK will not replace the current structure or VAT returns until July 2019 at earliest.
A Comprehensive Guide to the UK Making Tax Digital Initiative
With Making Tax Digital, the UK has set out “to become one of the most digitally advancedtax administrations in the world.” What does that mean for companies doing business there? Find out in this comprehensive guide.
Australian Treasurer, Josh Frydenburg, has announced that the Australian Government is taking steps towards removing the 10% GST that is imposed on feminine hygiene products in Australia. Frydenburg stated last week that it was the intent of the legislature to have an exemption in place by January 1, 2019 for these products. This announcement comes ahead of any legislation being presented to Parliament.
In a press release on October 16, 2018, Her Majesty's Revenue & Customs (HMRC) announced that the previously reserved pilot program for Making Tax Digital (MTD) was expanded to a much larger pool of businesses. According to the statement, HMRC is now allowing half a million businesses to enter the pilot testing program for MTD, in order to fully prepare for MTD going into effect on April 1, 2019.
In addition to this expansion, HMRC announced that for a small group of customers with more complex VAT return requirements, an additional six months has been granted before MTD will impact those businesses. This six month deferral will apply to customers who fall into one of a small number of categories including the following: trusts, not for profit organizations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (Government department and NHS trusts), local authorities, public corporations, traders based overseas, those required to make payments on VAT accounts, and annual accounting scheme users. For these groups of people, the MTD mandate will be deferred until October 1, 2019.
For the official announcement from HMRC on these developments please see the press statement here. In addition, updated guidance has been provided by HMRC, which explains the new deferral, seen here.
The National Statistical Institute of Bulgaria announced the following Intrastat thresholds for 2019:
For Intrastat reporting dispatches, the threshold was increased from BGN 260,000 to BGN 280,000. For Intrastat reporting arrivals, the threshold was increased from BGN 430,000 to BGN 460,000.
For further information regarding this announcement, please see here.
The Peruvian Tax Administration (SUNAT) published on October 15, 2018, regulation 242-2018/SUNAT, which establishes some new obligations to Operators of Electronic Services (OSEs) and also updates the sanctions for non-compliance when applicable. According to the new regulation, OSEs are now required to post in a web page the invoices that they have validated and make those documents available to the seller, the buyer, the recipient (if different) and the transporter.
This includes the electronic invoices per se, documents considered equivalents to invoices, the credit notes associated with them and the remittance documentation required for shipping and transporting goods.
The OSE should also inform if the electronic invoices were issued by taxpayer (emisor electronico) and on which date. Additionally, information should be provided about whether the documents have a proof of receipt (known locally as Constacia de Repcion or CDR), or communicate why the CDR does not exist.
The OSEs should identify the computer verification service that they provide and specify it as an independent item in the invoice. To ensure compliance with these requirements, the resolution establishes that the OSEs may be subject to a fine of 103,750 Peruvian Soles (approx. US$31,118.77) when non-compliant. Also, non-compliance with the communication of inconsistencies will be subject to a sanction of 4,150 Peruvian Soles (Approx. US $1246). These changes will become effective January 1. 2019, but some other provisions regarding electronic invoices issued for the provision of services will become effective immediately.
Hungary is one of several countries in Europe and beyond to have introduced technology-driven VAT compliance measures.
This eBook provides an insight into Hungary’s VAT reporting regulations.
The Brazilian Congress is once again considering a series of tax reforms aimed at simplifying its incredibly complicated indirect tax system. The primary proposal (known as PEC 293) proposes to replace the following taxes with a nationwide VAT.
1.ICMS – state-level VAT
2.IPI – federal tax on industrialized products
3.ISS – municipal tax on services
4.PIS and COFINS – federal social taxes
This reform also would eliminate the Tax on Financial Transactions (IOF) which would be substituted by a more narrowly targeted excise tax.
The VAT rate under this proposal has not been specified, but rather be left to the incoming president.
In Brazil, there is a surprising level of agreement that the current indirect tax system is untenable (some would call it crazy!). There is also broad based support for adopting a national VAT. However, a change of this magnitude will not be easy. The term “PEC” stands for Proposal of Constitutional Amendment, meaning that a change of this size and scope will require modifying the federal constitution. Further, eliminating local taxes requires the federal, state and local governments reach a consensus on revenue sharing. The challenge of coaxing local governments to give up their tax sovereignty when coupled with electoral intrigue, will make passing sweeping tax reform a tall order.