Overview of Latin America Electronic Invoicing and Tax Reporting Requirements
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This document discusses Latin American e-invoicing compliance requirements and how they present challenges for multinational companies using centralized SAP systems. It notes that VAT tax evasion in Latin America ranges from 25-50% and that countries are increasingly mandating e-invoicing to improve tax collection. However, constant regulatory changes in each country strain companies' abilities to continuously update and support siloed compliance systems. The document proposes that Invoiceware International's hybrid cloud platform could provide a single solution covering multiple Latin American countries, reducing companies' SAP support costs and dependency on internal resources to manage compliance changes.
Overview of Latin America Electronic Invoicing and Tax Reporting Requirements
- 1. Latin America E-Invoicing Compliance Overview INVOICEWARE INTERNATIONAL Global Compliance - Simplified
- 2. INVOICEWARE INTERNATIONAL © 2016 Confidential Latin America E-Invoicing & Reporting It is All About Maximizing Tax Collection Importance of VAT to Latin America Economies Colombia: 50% reduction in VAT and corporate tax evasion could bring more than COP 15 trillion (USD 8 billion) in additional revenues. Mexico SAT – 34% increase in VAT collections (~5 Billion USD) in 1H 2014 due to CFDI and automated reporting VAT Tax Evasion range from 25 to 50% of total potential
- 3. INVOICEWARE INTERNATIONAL © 2016 Confidential Latin America E-Invoicing & Reporting What is VAT? Minus Tax You Charge Your Customers Tax You Pay Your Suppliers Tax You Owe To Government
- 4. INVOICEWARE INTERNATIONAL © 2016 Confidential Tax Authorities Control an End To End Process Government standardized XML linked to VAT Tax reporting = Real Time Audits Supplier Registers XML Government XML Standard Only Legal document Registers VAT Tax Obligation PDF Accompanies Truck Copy of Invoice OR Signed Shipping Document depending on country VAT Tax Linked to XML Buyer only able to take VAT tax credits that are linked to approval codes in supplier XML Errors or corrections are the buyer’s issue to get fixed
- 5. INVOICEWARE INTERNATIONAL © 2016 Confidential Rules are Constantly Changing & Accelerating From 3 to 10 Countries in less than 2 Years, More Business Processes Affected 2013 2014 2015-2016 AR eInvoicing AR eInvoicing AR eInvoicing AP eInvoicing Freight Invoices SPED ECD AR eInvoicing AP eInvoicing Nomina eContabilidad AR eInvoicing Proforma VAT AR eInvoicing AP eInvoicing Freight Invoices SPED ECD SPED ECF eSocial AR eInvoicing AP eInvoicing Libros Reports
- 6. INVOICEWARE INTERNATIONAL © 2016 Confidential The Problem Constant Change meets Process Driven, Centralized SAP Maintenance The Latin America Effect Day to Day Support Once local IT issues are now corporate IT issues Change Management Each country can change 2-3x per year “One of the major problems with single instance is the inability to adapt the applications to ever evolving business requirements and advances in technologies in real time so that true business value is consistently delivered to the local teams” - Gartner Group
- 7. INVOICEWARE INTERNATIONAL © 2016 Confidential The Cost Resources Focused on Maintaining, Not Innovating Ongoing Costs Overlooked Annual cost for each local providers (annual fees, maintenance, hardware) Cost for Day To Day Support Someone has to monitor and manage the middleware issues Someone has to monitor and manage the SAP system – an invoice isn’t done until it is posted or acknowledged in the ERP system ABAP developer Changes based on the law a few times per year, per country Changes based on customer requests Could affect SAP master data, middleware, PDF output or distribution rules Controllers at end of month As data is different in multiple systems or silos, constantly checking numbers to avoid fines Annual Cost of Change Management Staffing - Look at a percentage of the functional analysts, middleware architect, project manager and SME (subject matter experts), System Integrator for a time period each year Unintended Costs Operations Shut Down, Collection Issues, Tax Audits, FCPA Issues
- 8. INVOICEWARE INTERNATIONAL © 2016 Confidential The Cause End to End Process Supported in Silos SAP ERP Middleware Integrate the System Different Solutions for Each Country CUSTOMER IDOC1 2 3 4 5 Monitor #1 Monitor #2 Monitor #3-6 Who Supports Who Supports Who Supports Short-Term Issues • Multiple Solutions • Internal Staffing Requirements • SAP Functional Experts • Middleware – SAP PI • ABAP Development Long-Term Issues • Monitor & Support • Who do you call when there is an issue? • Level 1, 2, and Level 3 Issues • Change management • Legislation updates? • Translating into technical requirements? • Who tests? • What internal staff is needed? 6
- 9. INVOICEWARE INTERNATIONAL © 2016 Confidential The Business Impact IT, Operations, and Finance Affected Constantly Cash, Compliance & CostEfficiency & Stability CFO Objectives How do I automate processes with my customers and suppliers? How do I streamline transparency of reporting & cash flow? Efficiency On-time delivery Lower Inbound Receiving costs Accurate tax reporting & IVA Credits Complete audit trails Cost Employee productivity Cost and time of shutdowns Tax penalties, missed deductions Cost of closing books monthly Flexibility Data standard support Complete audit trails Working capital optimization SAP as single system of record IT Consolidation Chief Information Officer How do I provide value with fewer systems and lower costs of upgrades? Effort build, integrate, and maintain SAP & multiple country solutions Staff, Solutions, Infrastructure Annual upgrades & consulting Stable budgeting vs. fire drill projects Buffer SAP from change VP Supply Chain
- 10. INVOICEWARE INTERNATIONAL © 2016 Confidential Why Leading Organizations Choose Invoiceware International Regional Latin America Platform • One Platform, multiple countries – Brazil, Mexico, Argentina, Chile, Ecuador, Uruguay, Peru & Colombia SAP Hybrid Cloud Deployment • Eliminate SAP ERP Configuration & Support issues • Single SAP Monitor for End Users • Fixed, Predictable Cost Today & Through Changes Production Support • Invoiceware a phone call away for day to day calls • English, Spanish or Portuguese • End to End Support – including SAP issues Change Management • Ongoing Changes Included (including both software & consulting) • Local teams work with the governments (i.e. SEFAZ, SAT, AFIP, SII) • Remove dependency on Internal Resources & SAP to keep system updated
- 11. INVOICEWARE INTERNATIONAL © 2016 ConfidentialConfidential Invoiceware Solution Coverage Digitizing the Economy through Real-Time Compliance Government Mandates Solutions • Brazil • Nota Fiscal • SPED • eSocial • Mexico • CFDI & Nomina Electronica • eAccounting • Chile • DTE & Libros Reporting • Argentina • eFactura multi-invoice types • Ecuador • CE multiple invoice types • Uruguay • CFE & Daiy reports • Peru • CPE & Libros • Additional countries in 2016 • Colombia • Inbound MIRO/MIGO automation • SAP Localization & Configuration
- 12. INVOICEWARE INTERNATIONAL © 2016 Confidential SAP ERP • Single Monitor within SAP ERP • Absorbs unique customizations & configurations of customer • Flexibility for SAP Upgrade Teams • Includes Change Management at a Fixed & Predictable Cost Invoiceware International – SAP Hybrid Cloud A Different Approach Versus On-Premise or 100% Cloud Invoiceware Latin America Compliance App • Multi-Country Support • Economies of Scale of government interfaces • Single Source of Support End-to- End
- 13. INVOICEWARE INTERNATIONAL © 2016 ConfidentialConfidential The Need Invoiceware Value LATAM Capability Change Management Enterprise Support Eliminate SAP Work Multiple Countries, One Platform Reduce dependency on internal resources: SAP, Middleware, AR, AP, Shipping, Receiving, & Controllers Avoid Company & Customer specific development Savings – avoid country specific ABAP development & deployment Simple Architecture One Monitor, Reusable components across countries Less Hardware & Architecture Costs One Support Team for YOUR implementation Solve Issues in Minutes, Not Days Keep Up with the Legislation All Updates Included (Software & Services) for all components at a Fixed Cost
- 14. INVOICEWARE INTERNATIONAL © 2016 ConfidentialConfidential Next Steps Contact Us To Learn More + 1800 – 988 – 0728 www.invoicewareint.com