How do countries use e-invoices?

	E-invoice will be soon compulsorily applied
	Taxation authorities propose delaying e-invoices till July 2019
	More than 300 million of e-invoices registered

Many countries have used e-invoices for long time

According to a research by the National Institute for Finance under the Ministry of Finance, in many countries, subjects of electronic invoices are mainly enterprises, sellers and service providers. E-invoicing is applied to B2G transactions (between enterprises and Government), B2B (between enterprises and enterprises), B2C (between enterprises and customers).

In Europe, electronic invoices are commonly used in large enterprises. In particular, in Sweden, e-invoices were introduced in the late 1980s and their users are enterprises. After the European Commission (EC) determined that e-invoices were to become a part of the e-Europe action plan, by 2014 the European Union (EU) issued a number directives requesting administrative authorities in all 28 member states by 2018 to use B2G e-invoices

Meanwhile, in the Asia-Pacific region, the application of e-invoices is at various stages and aimed at facilitating compliance with tax law and improving tax revenue.

In China, in addition to tax administration reform, competent authorities have electronized stamp, signature and invoice through an identity verification tool that ensure the accuracy of information. This allows the tax agency to monitor immediately instead of post monitoring in the past.

"So far, China has applied e-invoices to all enterprises. Each e-invoice has a QR code, Tax agency’s stamp and marking system for information scanning. Through e-invoices, tax authorities can check the inventory of enterprises. According to the roadmap, China is building an E-tax Department to carry out the national digitization strategy" (shown in the research of the National Institute for Finance).

In Singapore, since 2003, e-invoices have been applied. Accordingly, enterprises can issue e-invoices without the prior approval of the inland revenue authority of Singapore (IRAS), but must follow the instructions for registration dossiers. Enterprises can also hire a third party to create e-invoices and e-credits.

Similarly, in 2014, Indonesia developed a legal basis for e-invoices. From 1st July 2016, electronic invoices are mandatory for all enterprises. This provision has prevented counterfeit invoicing by using e-invoices. Enterprises have to implement some requirements such as installing applications provided by the General Department of Taxation, then they will receive an "e-certificate". In addition, e-invoices help Indonesia reduce the amount of tax refunds while increasing VAT revenue.

Regulations on compulsory sanctions

According to the National Institute for Finance, each country has its own electronic invoicing method to create the most favorable conditions for taxpayers and tax authorities.

In most Latin American countries, e-invoicing largely begins with the goods seller and service providers. Sellers and service providers must submit a standard invoice file to the central tax authority for approval before the goods and services are sold. Once approved, the sellers print a copy of the approved invoice and send it together with delivered goods. At the same time, the selling company sends the authorized e-invoice to its partner via e-mail. When the goods arrives, the purchasing partner can confirm the invoice by checking the e-invoice received via e-mail with the paper copy enclosed with the goods or services.

In South Korea, up to now, about 500,000 enterprises and 2.5 million business households have used e- invoices. E-invoicing is done in three ways.

Firstly, if the e-invoicing is done via the HomeTax system or Mobile HomeTax system, taxpayers are exempted from e-invoicing fee and do not need to invest in information technology infrastructure. The invoice information shall be automatically sent to the tax agency as soon as taxpayers issue. Currently, about 30% of enterprises choose this way.

Secondly, the invoicing is done by calling the ARS system and following the instructions. The legality of sellers is made by entering the information on the security card.

Thirdly, the invoicing is done on ERP, ASP systems (intermediary service provider). The ERP and ASP systems must comply with the e-tax invoice data standards and the connection standard issued by the tax agency. The ASP providers must send the issued invoices to the tax agency the following day.

Despite wide application, the methods of applying e-invoices by different countries is not similar. Some countries like South Korea and Indonesia, the use of e-invoices is mandatory for all enterprises. While Mexico and Chile, e-invoices are required for some groups of companies whose turnover exceeds the threshold. In Denmark, e-invoices are required for some transaction types.

In addition, in order to promote the use of e-invoices, some countries apply incentives such as allowing the deduction of a certain tax amount for each e-invoice. In contrast, for mandatory countries, sanctions are often imposed for non-compliance.

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For the case of non-compliance with the law on e-invoices, the sanction method depends on each country. Typically, in South Korea, for the act of none e-invoicing, the seller shall be fined 2% of the transaction value and the buyer shall not be deducted tax.