Day 2: Session 5 Invoice Management...How to deal with purchase invoices in an efficient and tax...
Transcript of Day 2: Session 5 Invoice Management...How to deal with purchase invoices in an efficient and tax...
Day 2: Session 5
Invoice
Management
1
The Westin, Singapore
26 February 2016
Sam Reeves - Deloitte
1. Introduction
2. Sales invoices
3. Purchase invoices
4. Other relevant documents
5. Conclusions
Contents
© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 2
Introduction
Rules and regulations differ
between countries,
therefore need to be aware
in order to stay compliant.
LEGISLATION
AUTOMATION
Automate as much as you
can but in a smart way.
HIGH VOLUMES
How to deal with high volumes
of invoices in an efficient but in a
tax (indirect tax) compliant way?
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.
CHANGE MANAGEMENT
Prepare a proper business
case for automation and
ensure all stakeholders are
engaged.
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Sales invoices
4© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
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 E-mail with PDF
o Point to point communication
o Use of a portal
o Use of a platform
o Paper
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Sales invoices
E-invoicing in Asia Pacific:
© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
Country E-invoicing
permitted?
Comments
China Handled by Golden Tax System
Hong Kong
Japan Storage in Japan required
Singapore Mandated since 2008
South Korea
Taiwan Requires government approval
6
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 Internally
o 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
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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 A2
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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 A2
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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
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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
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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
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Purchase
invoices
13© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
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
Purchase invoices
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Purchase invoices - tax code determination
An example:
OCR ERP ERP FI
Tax Function
Module
Scanned
Invoice
Invoice
Structured
Data
Invoice
Postings
Auto-Tax
Assign tax
codes
Calculate
tax
amount
Determination
tables
ERP Tax
Codes Profiles
With OCR – Optical Character
Recognition – key tax information
will be determined on the invoice
(e.g. Vendor Indirect Tax ID)
Re-trigger
the tax
function
module
Other e-
invoice
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Purchase invoices - tax code determination
Acquire
Input Data
1. PO data(e.g. Ship To
Country)
2. Master data (e.g. Material Tax
Indicator)
3. Invoice
Data (e.g. Vendor VAT
number)
Apply
Business
Rules
Look-up Tax
Codes
Assign Tax
Codes
Tax Function module
Data elements
required for tax
determination
(i.e. input
parameters of
ERP condition
table)
Interpreting
data (e.g. how
to handle
exceptions,
missing
data,…)
Look-up tax
codes from
ERP condition
tables
Tax code
assigned to
each item line
of PO and non-
PO related
invoices
Invoice
Items with
Tax Code
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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 e-mail can be opened in an automated way (e.g. e-mail
connector) and processed by means of OCR.
• A portal (PO flip over) makes invoices easier to post/process in your ERP system.
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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
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
Other relevant
documents
20© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
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
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Summary
Legislation is slowly
catching up with
innovation.
Should your company
wait to automate
invoice processes to
get e.g. more legal
certainty?
1No. There are
clear benefits of
implementing
automation that
are available
today. 2
Also
inspections will
be done in a
different way.
Be prepared
for it.3
A well
managed
invoice
process
will
prevent
errors/risk
4
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