Day 2: Session 5 Invoice Management

Transcription

1 Day 2: Session 5 Invoice Management The Westin, Singapore 26 February 2016 Sam Reeves - Deloitte 1

2 Contents 1. Introduction 2. Sales invoices 3. Purchase invoices 4. Other relevant documents 5. Conclusions 2016 Deloitte Global Tax Center Asia Pte. Ltd. 2

3 Introduction HIGH VOLUMES How to deal with high volumes of invoices in an efficient but in a tax (indirect tax) compliant way? AUTOMATION Automate as much as you can but in a smart way. LEGISLATION Rules and regulations differ between countries, therefore need to be aware in order to stay compliant. CHANGE MANAGEMENT Prepare a proper business case for automation and ensure all stakeholders are engaged. ANALYTICS Set up in such way that invoices can be easily checked in an automated way. REPORTING Indirect tax reporting could be largely automated with the right data and systems Deloitte Global Tax Center Asia Pte. Ltd. 3

4 Sales invoices 2016 Deloitte Global Tax Center Asia Pte. Ltd. 4

5 Sales invoices How to deal with sales invoices in an efficient and tax compliant way? Things to consider Invoice lay out Tax code determination Exchange of invoices to customers Storage of your sales invoices E-invoicing o with PDF o Point to point communication o Use of a portal o Use of a platform o Paper 2016 Deloitte Global Tax Center Asia Pte. Ltd. 5

6 Sales invoices E-invoicing in Asia Pacific: Country China Hong Kong E-invoicing permitted? Comments Handled by Golden Tax System Japan Storage in Japan required Singapore Mandated since 2008 South Korea Taiwan Requires government approval 2016 Deloitte Global Tax Center Asia Pte. Ltd. 6

7 Sales invoices lay out of your invoices The importance of the lay out of your invoices is often underestimated. An invoice needs to be Clear - not open to interpretation Is a document that your customer receives and needs to work with Compliant with tax law at minimum o Extra fields can be very useful o o Internally And for the customer Is customer using Optical Character Recognition (OCR)? You may not know but a lot of companies do nowadays Then your invoice lay out matters e.g. templates, standard ERP lay outs 2016 Deloitte Global Tax Center Asia Pte. Ltd. 7

8 Sales invoices tax code determination Typically all parameters are known to have a tax code determined automatically by the system. A typical SAP example: CoD CoA MTC CTC + Tax code E.g. BE BE 1 1 A1 E.g. BE BE 2 1 A0 E.g. BE AT 1 1 A Deloitte Global Tax Center Asia Pte. Ltd. 8

9 Sales invoices tax code determination Standard tax code determination is made more and more intelligent through Extra parameters Use of specific tax code determination software such as bolt-ons, also for Asia Pacific A typical SAP example: CoD CoA MTC CTC + e.g. INCO Term Tax code E.g. SG SG 1 1 EXW A1 E.g. SG SG 1 1 FCA A0 E.g. SG PH 1 1 DAP A Deloitte Global Tax Center Asia Pte. Ltd. 9

10 Sales invoices tax code determination Typical pitfalls Limited determination Only core business non-core business may generate invoices manually Lack of documentation Lack of training Users are not tax experts or fully aware of implications of miscoding Knowing what the system does or does not do can prevent issues 2016 Deloitte Global Tax Center Asia Pte. Ltd. 10

11 Sales invoices electronic invoicing Buyer consent Authenticity of origin Integrity of contents Paper and electronic invoices Legibility Rules can apply from issue until the end of storage period Electronic signature Definitions Authenticity of origin = Assurance of the identity of the supplier or issuer of the invoice Integrity of contents = Contents has not been altered 2016 Deloitte Global Tax Center Asia Pte. Ltd. 11

12 Sales invoices storage By law invoices need to be stored for a period depending on country Legislation can require that Authenticity and integrity can be guaranteed during the entire storage period Location of storage e.g. For Japan invoices can be stored within Japan (online access required). Paper often needs to be kept locally. Legibility Practicalities Do we have to print copies of invoices issued? Depends. Some countries allow that copies are archived electronically 2016 Deloitte Global Tax Center Asia Pte. Ltd. 12

13 Purchase invoices 2016 Deloitte Global Tax Center Asia Pte. Ltd. 13

14 Purchase invoices How to deal with purchase invoices in an efficient and tax compliant manner? Things to consider: Each invoice received must be posted and tax code assigned tax code determination Each invoice you receive needs to be entered in your accounting ideally in an automated way. E.g. via e-invoicing But also have a solution in place to deal with paper invoices efficiently. Self-billing avoids that you have to enter the invoice in your accounting can be automated 2016 Deloitte Global Tax Center Asia Pte. Ltd. 14

15 Purchase invoices - tax code determination An example: Invoice Structured Data Other e- invoice Scanned Invoice Invoice Postings OCR ERP ERP FI Assign tax codes Calculate tax amount Tax Function Module Re-trigger the tax function module Auto-Tax With OCR Optical Character Recognition key tax information will be determined on the invoice (e.g. Vendor Indirect Tax ID) Determination tables ERP Tax Codes Profiles 2016 Deloitte Global Tax Center Asia Pte. Ltd. 15

16 Purchase invoices - tax code determination 1. PO data (e.g. Ship To Country) 2. Master data (e.g. Material Tax Indicator) 3. Invoice Data (e.g. Vendor VAT number) Acquire Input Data Data elements required for tax determination (i.e. input parameters of ERP condition table) Tax Function module Apply Business Rules Interpreting data (e.g. how to handle exceptions, missing data, ) Look-up Tax Codes Look-up tax codes from ERP condition tables Assign Tax Codes Tax code assigned to each item line of PO and non- PO related invoices Invoice Items with Tax Code 2016 Deloitte Global Tax Center Asia Pte. Ltd. 16

17 Purchase invoices e-invoicing Rules for e-invoices for Purchase invoices generally are the same as for Sales invoices. Some key considerations: PDF invoices received via can be opened in an automated way (e.g. connector) and processed by means of OCR. A portal (PO flip over) makes invoices easier to post/process in your ERP system Deloitte Global Tax Center Asia Pte. Ltd. 17

18 Purchase invoices storage In order to keep only the scanned images, specific requirements need to be met, which are country dependent. Place where invoices are sent to for processing. Is it allowed to send invoices abroad? 2016 Deloitte Global Tax Center Asia Pte. Ltd. 18

19 Purchase invoices self-billing Invoices may be drawn up by the customer, where there is A prior agreement between the two parties AND Prior means before first self bill is issued provided that a procedure exists for the acceptance of each invoice by the supplier. Both parties must be able to demonstrate the existence of the agreement separately to the tax authorities Acceptance can be done implicit or explicit: E.g. by paying 2016 Deloitte Global Tax Center Asia Pte. Ltd. 19

20 Other relevant documents 2016 Deloitte Global Tax Center Asia Pte. Ltd. 20

21 Other relevant documents Your company will receive other documents than invoices which will have a tax impact: Expense note Digital expense notes Tax refund claims Customs documents Import & Export declarations 2016 Deloitte Global Tax Center Asia Pte. Ltd. 21

22 Summary Legislation is slowly catching up with innovation. Should your company wait to automate invoice processes to get e.g. more legal 1certainty? No. There are clear benefits of implementing automation that are available 2today. 3 A Also inspections will be done in a different way. Be prepared for it. 4 well managed invoice process will prevent errors/risk 2016 Deloitte Global Tax Center Asia Pte. Ltd. 22

23 2016 Deloitte Global Tax Center Asia Pte. Ltd. 23

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