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The significant gap between what many Latin American governments collect in taxes and what they should collect has turned the region into a world leader in terms of real-time reporting of transaction level data in the areas of B2B and B2C, CEO Andy Hovancik told BNamericas during a visit to Chile.
Latin America has been the "most progressive and aggressive in closing those tax gaps," says Hovancik.
The executive said Chile, Brazil and Mexico are the countries that really stand out in Latin America and the world. In the next few years, Peru and Colombia are the countries that are likely to move closer to the development seen in those regional leaders, he added.
For companies doing business in Latin America, keeping up with tax code changes is the main compliance challenge, said Hovancik. "There are a lot of rules and they are constantly changing."
Generating 30-35% of total revenue, Latin America is already Sovos' biggest operation outside the US and the region produces annual revenue of around US$60-70mn.
The company offers tax compliance solutions for almost every market in Latin America and it has offices in key markets like Argentina, Brazil, Chile, Colombia and Peru. The exception is Mexico, which is one of the largest markets for Sovos in the region, and it expects the opening of an office there in the next 12 months, said Hovancik.
The company's non-acquisition-led expansion in the region has been fast and will continue to be brisk. The number of employees has increased to around 450 from 50 some two years ago, and it is likely to rise to 600 employees in the next 12 to 18 months, said Hovancik. Its global workforce numbers around 1,100.
Hovancik said that Latin America is very attractive for Sovos due to its business growth potential and for being "the proving ground for what will happen in the rest of the world."
Sovos recently invested over US$3mn in regional data centers to make sure it has the proper infrastructure to continue to scale the business in Latin America, he said.
The company has almost 6,000 clients globally and these include SMEs, large corporations and multinational enterprises. In Latin America, the firm has several clients among the so-called multilatinas, or the Latin American companies that have become multinationals by expanding across the region.