Let’s start with a simple truth: while you may trust your data for tax purposes, the government often does not.
Businesses aim for good visibility into their operations to meet their goals, but they sometimes need more accuracy. On the other hand, tax authorities need the best possible insight into business data. Even minor improvements in tracking can save a country billions.
Business leaders often misunderstand this difference. Governments need to be faster to adopt digital tools for enforcing tax laws, but now that they see the benefits, a significant data revolution is underway, transforming how businesses operate.
Traditionally, businesses have interpreted tax laws, leading to many subjective decisions. Tax administrations have recently aimed to eliminate this subjectivity through electronic invoicing (e-invoicing).
E-invoicing is not just an accounting task; it’s a vital component of a new era of digital government and economic transparency. It allows regulators to get real-time, accurate data, impacting fiscal and monetary policies with unprecedented precision.
The Growth of E-Invoicing
E-invoicing is gaining global momentum. According to ResearchAndMarkets, the global e-invoicing market was worth $11.2 billion in 2022 and is expected to reach $35.9 billion by 2028.
Why E-Invoicing?
Governments and tax officials are embracing e-invoicing because it provides a trusted, clear record of transactions. E-invoicing eliminates human errors and subjective reporting by capturing data directly between business partners in real-time, ensuring the accuracy and integrity of the data.
To implement this, governments use technology to standardize how transaction data is reported, removing the inconsistencies of manual data processing. This standardized data can be used for various governmental functions, improving overall efficiency.
Enhancing Data Quality
The use of technology to ensure accurate tax reporting is increasing. In April, the U.S. and EU announced their commitment to recognizing compatible technical standards to enhance electronic data exchange globally. Organizations like Advintek’s support these efforts by aligning with the Digital Business Networks Alliance to create seamless data exchange frameworks.
However, more than simply requiring digital invoices is needed. Small to mid-size businesses (SMBs), which constitute over 95% of all companies globally, might still process data manually if left unregulated. Governments realize that more than mandatory e-invoicing is needed to push SMBs to automate their processes, leading to less reliable data.
To address this, governments are creating standards and ensuring interoperability of e-invoice networks. This allows SMBs to connect to a single access point for seamless data flow, improving reliability.
Turning Compliance into Growth
As governments require real-time data transmission, businesses are becoming more aware of the need to manage this data effectively. A centralized platform to handle all compliance data can help companies to respond to government queries and protect their interests.
While this seems like an increased burden, it presents a huge opportunity. By using a trusted, automated compliance platform that integrates tax determination, invoicing, reporting, and e-audit, businesses can meet compliance requirements and gain valuable insights.
Historically, tax compliance and business growth have not been seen as complementary. However, with the right approach, businesses can meet global compliance obligations and uncover insights that drive growth. This is possible because governments need accurate data just as much as companies do.
Conclusion
Now-a-days, data is the foundation of business operations. The Inland Revenue Board of Malaysia (IRBM) ensures data security and privacy, helping businesses navigate the challenges confidently. By leveraging e-invoicing and compliance platforms, companies can achieve regulatory compliance and business growth, turning a government mandate into a strategic advantage.
