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

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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 18
Compliance burden — invoicing obligations No. of countries 80 70 60 50 40 30 20 10 0 Advisable to use tax authority invoices Can use tax authority invoices Must use tax authority invoices Figure 3: Invoicing obligations — use of tax administration invoice Source: Ernst & Young No. of countries 80 70 60 50 40 30 20 10 0 Advisable to add company stamp Must add a company stamp Obligations Obligations Issued without company stamp 19 VAT and GST: multiple burdens for multinational companies Must use own invoices Figure 4: Invoicing obligations — company stamp Source: Ernst & Young No. of countries 50 45 40 35 30 25 20 15 10 5 0 Advisable to add legal language if no VAT Must add legal language if no VAT Obligations No need to add legal language if no VAT Figure 5: Invoicing obligations — addition of legal language if no VAT charged Source: Ernst & Young
Page 1: VAT and GST Multiple burdens for mu
Page 4 and 5: Introduction The global financial c
Page 6 and 7: The business burden of VAT What is
Page 8 and 9: Insights Obtaining VAT refunds in t
Page 10 and 11: “We encourage all countries to en
Page 12 and 13: “I believe most GST or VAT system
Page 14 and 15: “In South Africa, the last 5 to 1
Page 16 and 17: “An essential requirement within
Page 20 and 21: Insights Multiple invoices, multipl
Page 22 and 23: Complex transactions The seeds of t
Page 24: Tax administration viewpoint Prenes
Page 27 and 28: No. of countries No. of countries 2
Page 29 and 30: Insights “No penalties if there
Page 31 and 32: A recent OECD conference 8 recogniz
Page 33 and 34: Tax administration viewpoint Prenes
Page 35 and 36: Tax administration viewpoint: ways
Page 39 and 40: Contacts Philip Robinson philip.rob

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

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