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Latin America is becoming a world leader in the use of e-invoicing as governments spearhead the drive to reduce tax evasion through real-time invoice validation.
According to a study by Swiss consultancy Billentis, the region will see a compound annual growth rate of 32% in the use of e-invoices in the 2017-24 period, with Mexico the global leader in terms of adoption. Asia will see a 62% CAGR.
Billentis estimates that the global e-invoice and enablement market will be worth 3.3bn euros in 2017 and reach16.1bn by 2024. More than 90% of all invoices worldwide are still processed manually.
The emergence of technologies like blockchain, cloud aggregation, robotic process automation, machine learning and advanced analytics may speed up adoption.
According to Billentis, the Latin American model is inspiring countries in Asia and Europe.
Regional governments have gotten telecoms service providers to play a key role performing clearance services on behalf of tax administrations, and the multinational operators are beginning to expand these services to their operations outside the region, according to the report.
E-invoicing in Latin America includes use of digital signature on supplier certificates, imposed XML standards for tax authorities, integration with the physical supply chain and real-time, pre-approval of invoices by tax authorities.
Although Chile was one of the first movers, others such as Brazil and Mexico have overtaken Chile due to strict mandates for usage.
Mexico is the leading country worldwide in terms of e-invoicing according to the report. In 2017, it will come close to its objective of digitalizing all processes relevant for taxation. One of the last rollout steps for e-invoices will be the mandate for government to business (G2B) and government to consumer (G2C) invoices from mid-2017.
After this step, Mexican organizations are expected to exchange just over 10bn e-invoices on an annual basis.
In Mexico e-accounting has also become mandatory for companies and individuals, and all monthly salary slips must be sent electronically.
Besides efficiencies in archiving and reduction of paper, e-invoicing and e-accounting have led to a reduction in tax evasion, according to the report, with the country raising tax revenues by more than a third.
Looking ahead, the country is studying cross-border e-invoicing, and tax office SAT is working with several Latin American countries, the US and Canada.
In 2011, Brazil introduced the Nota Fiscal Eletronica para Consumidor Final (NFC-e) project to provide an electronic alternative to the existing fiscal printers in the retail segment.
The system is based on an XML file, including a digital signature, which is authorized before the payment.
NFC-e is in operation in the majority of states. Brazil intends to require businesses to submit monthly inventory and production reports, which includes all documents relevant for tax purposes.
Today around 1.4mn Brazilian businesses are issuing e-invoices for goods.
E-invoicing was voluntary in Chile until 2016. By the end of that year 420,000 businesses had issued e-invoices. Today, more than 88% of all invoices are sent electronically. Tax authorities offer incentives for recipients to provide e-confirmation of receipt of e-invoices.
Colombia has taken a more flexible approach in terms of format (XML, PDF, TXT) as legislation permits technology neutrality. E-invoicing was initially introduced as voluntary in December 2013, but is intended to become mandatory. A new decree will require buyers to digitally acknowledge receipt of the e-invoice by issuing a digitally signed XML message to the supplier. Fighting tax evasion is a major objective of the new digital invoicing system (Sifel).
The Peruvian model has incorporated international standard UBL 2.0 to facilitate trade with the EU and APEC countries. The model is similar to the Brazilian one. Around 85% of registered e-invoicing businesses use the system voluntarily however in 2018, e-invoices will become mandatory.
Argentina's tax authority (Afip) expanded the mandatory e-invoicing regime to all sectors of the economy in 2016.