ELECTRONIC TAX REPORTING GOES GLOBAL
More and more countries are introducing electronic tax requirements around the world. Doing business in these countries can present compliance challenges since each country has its own set of specialized rules and regulations. SNI provides a single vendor solution that saves multinational companies from the multi-solution, multi-vendor combination, to help them comply with mandatory requirements as they develop.
All governments transform to digitalization of tax compliance around the world one by one. Businesses prefer tax compliance automation systems in order to comply with the principles. Tax regulations vary from country to country and change very quickly around the world. Governments have their own deadlines and frequencies. It makes it difficult for businesses to keep up with new announcements and details and make sure they are submitting to the right place at the right times.
Most electronic tax reporting obligations vary per jurisdiction. However, there are two main categories of e-tax requirements. Firstly – mandatory e-invoicing. Secondly – transactional reporting mostly related to VAT, such as SAF-T, Control Statement, SII. Three selected electronic tax obligations will be presented for better understanding. Two of them are developments from EU countries: Greece and Hungary. The third one covers Egyptian e-invoicing and is a good example confirming that electronic tax reporting requirements are spreading globally.
The Hungarian e-Tax story from VAT Ledger to Real Time Invoicing Requirement
Hungary is considered to be a country with high complexity of tax regulations. In particular, Hungarian VAT reporting obligations have always been very demanding.
The first step in Hungarian e-tax journey took place in 2013, when a new attachment to VAT return was introduced. Domestic recapitulative statement, also known as VAT ledger, requires from taxpayers to list their sales and purchase invoices on a detailed level.
In 2016 Hungarian taxpayers had to adopt their invoicing software to the requirement of disclosing data about their sales invoices (Audit Report) at tax authorities’ request.
However, the revolution came with the introduction of Real Time Invoicing Requirement (RTIR) in July 2018. The real time means that Hungarian taxpayers have to submit their sales invoice data immediately after the invoice has been issued.
From technical perspective RTIR is XML based reporting. Its XSD structure has been modified a few times already and as of April 2021 version 3.0. of RTIR is in force. Data transmission takes place using REST API interface. Submitted information is validated by Hungarian tax authorities which provide a return message to the taxpayer with validation results.
Greece: Speeding up the rules for electronic taxation
Greece has always been struggling with significant losses from its VAT system with VAT gap at the level approximately 30%. That is one of the reasons behind the introduction of new tax reporting requirements in Greece.
The main obligation covers submission of digital tax and accounting data (so-called e-Books) to Greek tax authorities (AADE) via special tax portal myDATA. There are two books in place: analytical and summary one. Records cover ledgers of sales, purchases, payroll, fixed assets with a number of detailed tax characteristics. For example: VAT categories (rates), VAT exemption codes, withholding tax classification. The summary book contains total values applicable for a particular reporting period (month/ year).
Formally, e-invoicing in Greece is not mandatory, however e-Books myDATA system also requires taxpayers to provide the data about their invoices (not invoices themselves). What is important – the frequency of such reporting shall be considered as real-time, if transmission of data is via service provider or directly from ERP system.
Thanks to myDATA, a variety of automatic so-called cross-checks will be performed by AADE. In particular, it will be checked whether figures provided in taxpayer VAT return are in line with the values reported in e-Book.
Introduction of the myDATA system has been postponed a few times. However, it seems as of July 2021 transmission of tax data using myDATA will be mandatory.
Egypt: mandatory e-invoicing as of November 2020
Egypt Vision 2030 is the name of Egyptian long-term strategy aimed at digital transformation of public services. Therefore, the introduction of mandatory e-invoicing perfectly suits that strategy.
In November 2020 the first phase of Egypt e-invoicing project took place. Based on the tax authority’s decision 134 biggest (most significant) companies were covered by the obligation of issuing invoices in electronic manner. The second phase (February 2021) extended e-invoicing on additional 347 businesses. As of May 2021, it is expected that all large Egyptian taxpayers will be covered by mandatory e-invoicing.
Egyptian e-invoicing follows tax clearance model. It means that an invoice needs to be pre-approved by tax authorities, before transmission to the customer. Thanks to such approach tax authorities have immediate (real-time) access to taxpayer’s tax data. Tax clearance model is in place also for example in Italy.
Technically, Egyptian e-invoices need to be generated in XML or JSON format. The integration between tax authorities and taxpayer’s system is based on various APIs. Moreover, each e-invoice has to be digitally signed. Egypt e-Signature has to be performed via HSM (Hardware Security Model) device or USB token.
SNI provides comprehensive, flexible, and global solutions which can easily be integrated, maximized for businesses’ existing systems and infrastructure for tax compliance. “We are dedicated to be the central partner for our customers to stay compliant in all countries. Our global network of leading expert advisors comprising 12 countries, we continue to be the only global partner of the corporations, whom we serve, in the area of tax technologies.” says our Founding Partner & CEO Cem Yurdakul. SNI Partner & CCO Rıdvan Yiğit continues, “In addition to the countries such as Egypt, Greece, Hungary and Germany in which the regulations on e-invoicing and tax reporting have already been fostered, our main priority is to follow upcoming regulations in Saudi Arabia, Romania, Albania and the other Peppol countries on behalf of our customers.They are potential countries in the short run. Whereas among our long term plans is to become one of the mostly preferred tax technology firms worldwide.”