The Turkish tax authorities have demonstrated over the last few years that there is no time to lose in the implementation of their ambitious electronic transformation plan.
Though e-invoicing and e-bookkeeping have been made available to all companies in Turkey since 2010 and 2011, respectively, the real push for adoption only came with the publication of communiqué no 421 in 2012, which made these applications mandatory for around 20,000 companies. Following the recent extension of its scope of obligation, application of e-invoicing is expected to gain traction with its use estimated to increase to 50,000 by the end of the year, and to reach 100,000 in 2016.
Government mandate remains the main propeller in the shift from paper to electronic reporting formats and companies have continued to rush their finance and IT teams to adjust their processes as much as they can to uncertain rules amid never-ending new applications and very tight deadlines.
Despite the government's enthusiasm, exchange of invoices in electronic format in Turkey is quite peculiar. There are two distinct systems available: In e-invoicing, the authorities act as a mandatory hub and have access to all e-invoices in real time. However, as this system is only applicable whenever both parties are registered in e-Invoicing, companies are still expected to issue invoices in official serialised, pre-printed paper to most of its customers.
It is because of this that a new application, named 'e-archive' by the authorities, was recently made available for companies already using e-invoicing. This allows companies to issue invoices in electronic format to all their other customers directly (for example, by e-mail), though the authorities require a monthly report with at least a dozen fields for each invoice. There are 150 companies now authorised to issue e-archive invoices, but this number is expected to grow considerably by the end of the year as companies conducting online sales are mandated to join this application.
There is no need to sugar-coat matters and pretend that the main goal is to save paper. The tax authorities do aim to save trees, but they are also particularly interested in how easy and convenient it will become to remotely monitor and audit companies' tax data.
This is a double-edged sword for companies, as the several mandatory fields in each e-invoice create a huge potential in terms of process automation, data synchronisation and data analysis, but also significant risks associated with insufficient data quality and inaccuracies between tax declarative obligations.
While releasing new applications in quick succession, such as e-notification, e-waybill and new-generation cash register devices, all of which will further disrupt existing taxpayer processes, the authorities are assembling an array of tools to complete their e-audit plans.
In this regard, companies in Turkey can no longer trust market practices crystallised over several years of manual paper-based processes. It is of the utmost importance to engage in a proactive approach to integrate all these new applications in a manner that not only satisfies tax compliance requirements, but also allows for operational efficiency and IT simplicity.
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