(GST) compliance obligations (pdf, 5.62 MB) - Ernst & Young T ...

A working sales invoice
A simple and telling example of the
problem faced by MNEs in negotiating
detailed national rules is the sales invoice.
As the basic business document that
accompanies all business-to-business
(B2B) transactions, invoices play a vital
role in accurate financial reporting. MNEs
themselves want to ensure that their
invoices report accurately what has been
sold to whom, when and where, and the
amount due.
Surely this is an area where taxpayers’
and tax administrations’ interests
coincide? If vendors, purchasers and
tax collectors need the same basic
information, MNEs could lighten their
day-to-day compliance burden by
adopting standardized invoice formats
across different countries. But the reality
is far less rosy. In our survey of the VAT
invoicing requirements in 90 countries,
we found widely differing national
requirements that make it difficult to use
a standard sales invoice document and a
standardized invoicing process.
One of the most onerous local
requirements for MNEs that use shared
service centers is the need to issue an
invoice in the local language and in the
local currency. Another factor adding
to complexity is the lack of standard
requirements. Invoicing deadlines
around the world, for example, range
from no days to one year after the time
of supply (see figure 1). In 19 of the
countries we surveyed, the taxpayer
must use an invoice generated by the tax
administration or pre-approved by it in
some way, and in 5 countries, invoices
must be issued on colored paper. In 31
countries, it is obligatory or advisable to
sign invoices before they are issued; in 24
countries, it is obligatory or advisable for
invoices to bear the company stamp; in
50 countries, it is obligatory or advisable
to add legal language if no VAT is charged
(e.g., citing the relevant legislation); and
in 57 countries, an exemption certificate
is advisable or required from a customer
who requests VAT exemption based on its
status.
The result of these wide variations, in
practice, is that it is virtually impossible
for a global company to design something
as fundamental to its day-to-day business
operations as an invoice that works all
over the world.
VAT and GST: multiple burdens for multinational companies
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