Learning cloud-based, electronic invoicing from our neighbors
Credit to Author: EUNEY MARIE MATA-PEREZ| Date: Wed, 06 Feb 2019 16:17:23 +0000
In response to the thrust of the Asia-Oceana Tax Consultants’ Association (AOTCA) to have more exchange of information among its members in the Asia-Pacific region, the Tax-Accountancy Association Union of Republic of Chinese Taipei (TAAUCT) held a regional tax conference last Jan. 21, 2019 in Taipei City and invited AOTCA members to speak at the conference. Ms. Shek Wing Man of the Tax Institute of Hong Kong spoke on the Base Erosion and Profit Shifting (BEPS) development and digital economy taxation while I introduced AOTCA to around 100 conference participants.
TAAUCT officers also brought us to the office of the National Taxation Bureau of the Northern Area of Taiwan (NTB-Northern Area) in Taoyuan City, 46 kilometers from Taipei City, and introduced us to Director General Wang Hsui-Chung and other officers of the area, who generously hosted our party and served us with the wonderful Taiwan oolong tea and delicious fruits.
After showing us an exhibit of Taiwan’s vintage invoices (which they call “fapiao”), the officers of the NTB-Northern Area showed us a PowerPoint presentation on Taiwan’s Uniform Invoice System and Cloud Invoice Outcome through a platform provided by the government and which could be accessed even by small business owners. We learned that since they adopted the system, compliance and collection significantly increased. It was interesting to learn of their promotion activities, which include a lottery program available to all participants.
China has also been moving towards making e-invoicing mandatory for several core service-based industries to increase compliance and reduce the cost of invoicing. Recently, it has approved the use of the WeChat platform, through a blockchain technology approved by the tax authorities, to issue e-invoices to customers in the City of Shenzhen, the pilot city for launching blockchain electronic invoices or fapiao nationwide. The use of blockchain ensures that each invoice can be traced back, information cannot be tampered with, and data cannot be lost and the whole process can be monitored in real time. (https://technode.com/2018/08/10/shenzhen-blockchain-invoice)
Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (Train) Law, has also mandated the use of electronic invoicing within five years from the effectivity of the law and upon the establishment of a system capable of storing and processing required data for large taxpayers, taxpayers engaged in e-commerce and those engaged in the export of goods and services, (Tax Code, sec. 237, as amended).
The same taxpayers shall also be required to electronically report their sales data to the Bureau of Internal Revenue (BIR) through electronic point-of-sale systems, (Tax Code, sec. 236-A, as amended). These are definitely aimed at enabling the BIR to get the correct sales and revenues information directly and immediately.
The use of e-invoices, however, should be aimed not just for the BIR or the government to be able to get data from the taxpayers swiftly and efficiently. It should also have the counterpart benefit of giving taxpayers the ease in claiming tax refunds, among others. When data of transactions are reported online or available in a cloud platform, verification of transactions for refund purposes can be done by checking or matching information stored therein, without even the need for taxpayers to submit the actual invoices themselves.
This is what happened in India’s Goods and Services Tax (GST) refund processes. In its effort to ease the compliance burden of businesses under the GST system, India is just requiring the submission of GST returns for claiming income tax credit (ITC) under the GST. This replaced previous rules requiring businesses to submit all purchase invoice relating to inputs, input services, and capital goods for processing of claims, (see indiabriefing.com, September 13, 2018). Their tax authorities can very well verify the transactions subject of the GST through the electronic platform established and used by taxpayers. We learned that with this new system, GST refunds in India can be granted in 30 days. The government also becomes liable for interest if there are delays in granting refunds. (No wonder India made giant leaps in the World Bank ease-in-doing business score card).
These developments in India, China and Taipei are enviable and would make our tax authorities drool. They are anchored on a good platform or technology infrastructure which tax authorities can use. Records show that with the use of technology, collection efficiency is greatly improved. Also, improvement in taxpayer’s service and reduction in compliance costs are natural consequences. More importantly, issuance or use of fake or fraudulent invoices is prevented.
In passing the TRAIN Law, our legislators probably have the same vision. However, unless and until the BIR will be provided with the required platform, system or technology capable of storing and processing required data for taxpayers, it will be difficult for us to achieve such a vision.
Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. She is the President of the Asia-Oceana Tax Consultants’ Association. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF Counsel’s website at www.mtfcounsel.com
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