Day 2: Session 5

Invoice
Management

The Westin, Singapore

26 February 2016

Sam Reeves - Deloitte

1
Contents

1. Introduction

2. Sales invoices

3. Purchase invoices

4. Other relevant documents

5. Conclusions

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 2

Introduction AUTOMATION
Automate as much as you
can but in a smart way.
HIGH VOLUMES LEGISLATION
How to deal with high volumes Rules and regulations differ
of invoices in an efficient but in a between countries,
tax (indirect tax) compliant way? therefore need to be aware
in order to stay compliant.

REPORTING
CHANGE MANAGEMENT
Indirect tax reporting could be
Prepare a proper business
largely automated with the
case for automation and ANALYTICS right data and systems.
ensure all stakeholders are
engaged. Set up in such way that invoices
can be easily checked in an
© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
automated way. 3
Sales invoices

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 4

Sales invoices
How to deal with sales invoices in an
efficient and tax compliant way?

Things to consider…
• Invoice lay out • E-invoicing
• Tax code determination o E-mail with PDF
• Exchange of invoices to customers o Point to point communication
• Storage of your sales invoices o Use of a portal
o Use of a platform
o Paper

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 5

Sales invoices
E-invoicing in Asia Pacific:

Country E-invoicing Comments

permitted?
China
 Handled by Golden Tax System

Hong Kong

Japan
 Storage in Japan required

Singapore
 Mandated since 2008

South Korea

Taiwan
 Requires government approval

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 6

Sales invoices – lay out of your invoices
The importance of the lay out of your
invoices is often underestimated.
An invoice needs to be…
• Clear - not open to interpretation
• Is a document that your customer
receives and needs to work with
• Compliant with tax law at minimum
o Extra fields can be very useful
o Internally
o And for the customer
© 2016 Deloitte Global Tax Center Asia Pte. Ltd.
• Is customer using Optical Character
Recognition (OCR)?
• You may not know but a lot of
companies do nowadays
• Then your invoice lay out matters
e.g. templates, standard ERP lay
outs
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Sales invoices – tax code determination

Typically all parameters are known to have a tax code determined automatically by the
system.

A typical SAP example:

CoD CoA MTC CTC + Tax code

E.g. BE BE 1 1 A1

E.g. BE BE 2 1 A0

E.g. BE AT 1 1 A2

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 8

Sales invoices – tax code determination

Standard tax code determination is made more and more intelligent through
• Extra parameters
• Use of specific tax code determination software such as bolt-ons, also for Asia Pacific
A typical SAP example:

CoD CoA MTC CTC + e.g. INCO Term Tax code

E.g. SG SG 1 1 EXW A1

E.g. SG SG 1 1 FCA A0

E.g. SG PH 1 1 DAP A2
© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 9
Sales invoices – tax code determination

Typical pitfalls
• Limited determination
• Only core business  non-core business may generate invoices manually
• Lack of documentation
• Lack of training
• Users are not tax experts or fully aware of implications of miscoding
• Knowing what the system does or does not do can prevent issues

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 10

Sales invoices – electronic invoicing

• Buyer consent
• Authenticity of origin
• Integrity of contents
‒ Paper and electronic invoices • Definitions
‒ Legibility ‒ Authenticity of origin = Assurance of the
‒ Rules can apply from issue until the end identity of the supplier or issuer
of storage period of the invoice
• Electronic signature ‒ Integrity of contents = Contents has not
been altered

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 11

Sales invoices – storage

By law invoices need to be stored for a

period – depending on country

Legislation can require that… • Practicalities

• Authenticity and integrity can be • Do we have to print copies of
guaranteed during the entire storage invoices issued?
period
• Depends. Some countries allow that
• Location of storage e.g. For Japan copies are archived electronically
invoices can be stored within Japan
(online access required). Paper often
needs to be kept locally.
• Legibility

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 12

Purchase
invoices

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 13

Purchase invoices

How to deal with purchase invoices in an efficient and tax compliant manner?

Things to consider:
• Each invoice received must be posted and tax code assigned
 tax code determination
• Each invoice you receive needs to be entered in your accounting
 ideally in an automated way. E.g. via e-invoicing
But also have a solution in place to deal with paper invoices efficiently.
• Self-billing avoids that you have to enter the invoice in your accounting
 can be automated
© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 14
Purchase invoices - tax code determination
An example: Invoice
Other e- Scanned Invoice
Structured
invoice Invoice Postings
Data

OCR ERP ERP FI

Assign tax Calculate

codes tax
amount

Re-trigger
Tax Function the tax Auto-Tax
Module function
module

With OCR – Optical Character

Recognition – key tax information
will be determined on the invoice Determination ERP Tax
(e.g. Vendor Indirect Tax ID) tables Codes Profiles

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 15

Purchase invoices - tax code determination

1. PO data Tax Function module

(e.g. Ship To
Country)
Apply
Acquire Look-up Tax Assign Tax
Business
Input Data Codes Codes
Rules Invoice
2. Master data
(e.g. Material Tax Items with
Indicator) Data elements Interpreting Look-up tax Tax code Tax Code
required for tax data (e.g. how codes from assigned to
determination to handle ERP condition each item line
3. Invoice (i.e. input exceptions, tables of PO and non-
Data parameters of missing PO related
(e.g. Vendor VAT ERP condition data,…) invoices
number) table)

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 16

Purchase invoices – e-invoicing

Rules for e-invoices for Purchase invoices generally are the same as for Sales
invoices.

Some key considerations:

• PDF invoices received via e-mail can be opened in an automated way (e.g. e-mail
connector) and processed by means of OCR.
• A portal (PO flip over) makes invoices easier to post/process in your ERP system.

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 17

Purchase invoices – storage

• In order to keep only the scanned images, specific requirements need to be met, which
are country dependent.

• Place where invoices are sent to for processing. Is it allowed to send invoices abroad?

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 18

Purchase invoices – self-billing

Invoices may be drawn up by the customer, where there is

• A prior agreement between the two parties AND
• Prior means before first self bill is issued
• provided that a procedure exists for the acceptance of each invoice by the supplier.
• Both parties must be able to demonstrate the existence of the agreement separately
to the tax authorities
• Acceptance can be done implicit or explicit:
• E.g. by paying

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 19

Other relevant
documents

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 20

Other relevant documents

Your company will receive other documents than invoices which will have a tax
impact:
• Expense note
• Digital expense notes
• Tax refund claims
• Customs documents
• Import & Export declarations

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 21

Summary

Legislation is slowly
catching up with

1
innovation. Also
Should your company inspections will
wait to automate
invoice processes to
get e.g. more legal
certainty?
No. There are
clear benefits of
3 be done in a
different way.
Be prepared
for it.
A well
managed

2
implementing
automation that
are available
today.
4 invoice
process
will
prevent
errors/risk

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 22

© 2016 Deloitte Global Tax Center Asia Pte. Ltd. 23
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