The following post is authored by Juan Francisco Echevarria, Senior Researcher, America EconomiaAt AméricaEconomía, our goal is to be the leading source of news for businesses operating in Latin America. With a monthly regional publication and country-specific editions in Chile, Brazil, Ecuador, Bolivia, Paraguay, Peru, Mexico and Central America we’re constantly talking to businesses operating here about the economy, their outlooks, trends and challenges. One topic of conversation that comes up again and again is Latin America’s complex business-to-government regulatory environment. Multinationals tell us that they face nothing like it anywhere else in the world, and businesses of all sizes report their struggles to stay ahead of the ever-changing regulations.
From an economic perspective, the regulations enacted in Brazil, Mexico, Chile, Argentina, Peru, Uruguay, Ecuador and Colombia make sense. A few yearsago, Latin America was the leading region in tax evasion, with governments losing between 25% and 50% of VAT collection each year, according to the World Bank. These governments are now closing loopholes and cracking down on fraud in order to improve revenues, increasing tax intake so that they can collect the funds necessary to infuse and enhance their economies.
However, in light of these requirements, companies operating here are forced to adopt new technologies and processes, and risk severe consequences if they make even a single error. That’s why we were excited to undertake a survey in partnership with Invoiceware International to shed some light on these issues and quantifiably understand the impact of government-mandated e-invoicing on companies. The results underscored what we’ve been hearing anecdotally for years:
- These mandates seriously affect business planning, with 90% of respondents reporting a relationship between these mandates and their business outlooks.
- The requirements present several challenges – from IT infrastructure to costs to personnel to change management.
- The consequences are real. Nearly 40% have experienced operational delays related to e-invoicing issues.
- Staying on top of these requirements is not a simple task, with less than 30% of respondents reporting that they understand and are prepared for new mandates rolling out in Colombia, Brazil, Mexico and Peru this year.
But there is good news for companies in light of these mandates. Some companies are using government-mandated standardization and processes to streamline productivity and minimize costs. To learn more about the implications of these government mandates on companies operating in Latin America, and see how companies are approaching compliance, download our full report – Global Executives Weigh In: Latin American E-Invoicing Heavily Shapes Business Outlook; Few Companies Prepared.
About the author
Juan Francisco Echevarria is a Senior Researcher at AméricaEconomía Intelligence where he has been involved in the development of many different business intelligence projects such as Latin America's 500 Biggest Companies, Latin Americas Top 250 Banks and the annual Ranking of Latin America's Finance