As a leading professional services firm, KPMG Australia (KPMG) is committed to meeting the requirements of all our stakeholders – not only the organisations we audit and advise, but also employees, governments, regulators and the wider community. We strive to contribute to the debate that is shaping the future of invoicing and welcome the opportunity to provide a submission to the Consultation Paper (the Paper) released by Treasury.
KPMG supports e-invoicing adoption, given the potential productivity benefits that will flow from universal adoption across Australia’s business community. KPMG also supports the view that e-invoicing adoption will be a significant step towards the Prime Minister’s goal of becoming a leading digital economy by 2030.
Adoption of an e-invoicing and e-procurement framework
Driven by emerging digital frontiers and globalisation, governments around the world are increasingly leveraging technology to drive productivity but also strengthen tax collection. In many countries this effort has gone hand in hand with requirements to provide electronic files directly from companies’ enterprise resource planning (ERP) systems. That move in turn provides governments a more efficient means of auditing tax compliance.
In 2019, Australia adopted the Pan European Public Procurement OnLine (Peppol) framework. Peppol is an internationally recognised framework for e-Invoicing and e-Procurement, used by over 30 countries in Europe, Asia and North America. The Peppol framework provides standardised formats that can be integrated into an organisation’s existing enterprise architecture.
A push for mandatory e-invoicing in Australia
The Australian Taxation Office (Australia’s Peppol Authority) and other Australian government agencies do not currently plan to have access to the e-invoices exchanged between businesses . As such, unlike other countries , the push for mandatory e-invoicing in Australia is largely as a result of its productivity benefits, rather than for tax compliance purposes. However, it is important that the tax compliance-related benefits are not set aside as part of the consultation process.
As more governments move towards mandatory e-invoicing, businesses in Australia will be facing tighter windows to implement tax-compliant invoices and will no doubt be faced with a growing tide of industry partners adopting e-invoicing. However, no change comes easy and in a digital age, the speed of reporting increases the speed of error. Businesses will need to ensure they are collecting and processing the correct data or significant costs may arise.
E-invoicing approach to Payment Times Reporting
KPMG is currently involved in helping our clients implement the Payment Times Reporting (PTR) Scheme, which has its first reporting period for the six months ending 30 June 2021. Our current experience indicates that PTR is much more than running another report out of existing procurement systems. Many PTR clients will spend the best part of 2021 implementing transitional PTR reporting workarounds, followed up with longer-term reporting solutions.
Therefore, timing considerations of any government-mandated adoption of e-invoicing needs to be very mindful of pre-existing PTR compliance priorities. While it seems the move to e-invoicing has a degree of inevitability, the Government will need to ensure compliance costs and red tape are minimised and any push to mandate e-invoicing comes at the right time to limit regulatory burden.
In light of PTR compliance priorities, KPMG is recommending Option 3, a non- regulatory approach, be adopted until the conclusion of the legislative review of the PTR Scheme is complete in mid-2023. This will also allow for any learnings to be considered following the mandatory adoption of e-invoicing by Commonwealth agencies.
KPMG also discusses some of the practical implementation issues the Government may need to address in the future if mandatory adoption is supported, i.e. Option 1 or Option 2. KPMG considers that it may be worthwhile for the Government to consult with the states and territories prior to adopting the same definition of a large business included in the PTR scheme, given the complexities that have arisen.
Recommendation 1: The Australian Government implements Option 3, a non-regulatory approach to Peppol e-invoicing adoption, pending the following:
- the legislative post-implementation review of the Payment Times Reporting (PTR) Scheme in mid-2023
- the rollout of e-invoicing by Commonwealth agencies in 2021.
Recommendation 2: The Australian Government considers running an e-invoicing pilot across a nominated supply chain to better understand any technology, education and/or regulatory burden implications. Sectors that may benefit from a pilot could include healthcare or financial services.
Recommendation 3: The Australian Government considers a long implementation timeframe, much like the European Union’s 5 year timeframe, when considering any mandatory adoption of e-invoicing.