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Electronic invoice: a tool against tax evasion

02/04/2015

Electronic invoicing is not yet a major trend in the United States, but companies that have already turned to e-billing technologies are witnesses of their advantages. On other countries, especially those located in the Latin America region, e-invoicing is mandatory and, therefore, it is far more settled within companies. Mainly because of this, electronic invoicing has become a powerful tool for fiscal control to stamp out tax evasion.

When we think of a digital invoice as an electronic document with a pre-established format that can automatically flow from companies to customers, there are some clear benefits. No space is needed for storing endless documents, no money is wasted in printing and sending, and time is saved thanks to an increase in efficiency. But, how can these documents help governments on the necessary task of tax control?

Electronic invoices are unique, secure and comprehensive documents, since they follow a pre-established format and often include a digital signature. This makes e-Invoices a valid way to control tax evasion. Even if this use of digital billing is currently far from feasible in the United States, where e-invoicing is not mandatory, it is already a reality in the Latam region, where every time an e-invoice is issued, it is automatically declared to the Tax Agency.

Tax control in Latin America

Chile was one of the first countries in Latam to roll out electronic invoicing, which is now mandatory for companies with revenues greater than 100,000 UF. The Chilean Treasury stands to raise $600 million per year thanks to the reduction of false invoices. The government expects that, by 2018, electronic invoicing will be fully extended.

The tax control balance is also positive in Mexico, where electronic invoicing is mandatory for most taxpayers. The Tax Administration Service (SAT) soon proved the efficiency of this imposition: for every dollar they invested in tax control operations, they obtained $61.1 back.

For companies operating in these countries, as well as others in Latam where e-invoicing is mandatory, like Brazil, Ecuador, Argentina, Guatemala or Peru, it is crucial to cope with the requests of each country. This is why, EDICOM has developed an International e-Invoicing solution, which makes sure companies comply with the different legal and technical requirements in each state.

E-invoicing in the United States

In English-speaking countries, contrary to what happens in Latin America or Europe, tax control traditionally relies on bank records as proof of a transaction, without using invoices. However, the Federal Reserve has recently published a report with significant suggestions on how to make the nation’s payments processes faster and more secure, electronic invoicing being one of them. Even if these are mere suggestions, the Federal Reserve has already noted how an e-invoicing plan would have major implications for B2B companies, which would need to work on the adoption of far more secure and efficient business-to-business payment.

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