E-invoicing: Are businesses in the Middle East prepared?

BrandPost By Pagero
Apr 21, 2021
Enterprise Applications

Gulf nations, like countries around the world, are defining policy frameworks around electronic invoicing, in order to streamline the way businesses send and receive billing and payment-related documents.

cio middle east pagero article image
Credit: Pagero

The COVID-19 pandemic has had an impact on almost every facet of life around the world, causing companies to review their business strategies. The result is that while the crisis has presented challenges, it has also provided an opportunity for organizations to evolve and embrace a new reality where digital processes prevail. Beyond the deployment of teleworking tools, companies are investing in other types of technology that allow them to conduct business activity anywhere, at any time.

As organisations pursue digitalisation strategies, electronic invoicing, or e-invoicing, is considered to be a fundamental instrument for optimising business processes.

What is e-invoicing?

E-invoicing is essentially the automated, digital exchange and processing of invoice-related documents such as bills and payments among different entities, typically buyers and suppliers.

E-invoice frameworks are sets of standards and policies, increasingly implemented by governments, designed to allow different organisations to exchange e-invoices regardless of the specific ERP systems they use for payments and accounting.

For example, in India e-invoicing obligation has been extended to companies with an annual turnover exceeding INR 50 Crores (US$6.65 million), from April 1st 2021. In France, e-invoices are mandatory for the business-to-government (B2G) sector.

What’s next for e-invoicing in the Middle East?

 In order to support Saudi Arabia’s Vision 2030 programme, the General Authority of Zakat and Tax (GAZT) enacted on 4 December, 2020, new regulations regarding the implementation of e-invoicing. The regulations will apply to all resident taxable persons in the Kingdom. Businesses have one year to deploy the required technology and adapt their systems to comply with the new digital standards.

The e-invoicing mandate aims to curb the shadow economy, increase adoption of tax returns, harmonise business processes with global practices, improve KSA’s ranking on relevant international indicators, as well as promote fair business competition and consumer protection.

“Saudi Arabia is not the first country in the Middle East and it won’t be the last to implement an e-invoice mandate. We know Qatar, Oman and Bahrain are looking to implement mandatory e-invoicing, and Egypt has already a pilot in progress,” says Luis Ortega, managing director, MEAA, at Pagero.

“Through e-invoicing businesses can achieve savings of up to 80% of invoicing costs through automating their processes,” Ortega adds. “It too serves the tax authorities for tax reporting and avoiding tax evasion purposes, helping to reduce the current VAT gap estimated between 20-30% (equiv ½ trillion euros). E.g. countries Chile and Mexico have reduced VAT gap by 50% by introducing e-invoicing initiatives.”

Businesses connect to e-invoice networks not only to exchange documents but also to be able to report, in real time, invoices to tax authorities in different countries. The electronic invoice is the first step of digitalization.

Pagero provides buyers and sellers with connectivity and the technology to digitalise and automate the exchange of orders, delivery documents, invoices and payments. Companies that operate using the Pagero Network have a partner that ensures regulatory compliance with government mandates and tax issues globally.

For example, Pagero and Hewlett Packard Enterprise (HPE) have been working together during 13 years, when the Swedish government introduced requirements for e-invoicing. HPE is currently using Pagero services in 28 EMEA countries and India, entailing a broad variety of business compliance requirements as well as a number of customer-specific layout demands.

“With the help of Pagero, we have been able to fulfil our invoicing-related tax and legal requirements in all 29 countries where we use them as our e-invoicing service provider,” says Mihai Chiriac, program manager of the EMEA & APJ e-invoicing program at HPE.

Thanks to this cooperation, HPE has standardised their e-invoicing procedure, reduced invoice turnaround, and found the simple way to comply with local business regulations worldwide.

If you would like to find out more e-invoicing and how this can benefit your business, please get in touch with Luis directly at luis.ortega@pagero.com