According to a report published by the European Commission three years after the e-invoicing system was implemented, more than 5 billion invoices have been registered each year, with more than 8 million Portuguese taxpayers registered on the Tax Authority’s website, enabling them to handle their tax affairs online.
We are living in times of change. All the digital transformations that had previously been postponed were accelerated by the COVID-19 pandemic, generating enormous challenges for tax systems in developed countries.
An increase in digital business, as well as new and diverse business platforms, requires tax systems to be analysed and thought put into how taxation should be implemented. In addition, an assessment of how each state’s information systems can be modernised, making them more effective, operational and accessible to taxpayers.
The 2013 intervention of the troika in Portugal led to the OECD making notable recommendations to limit the parallel (or shadow) economy, increasing revenue collection and conveying the message that everyone stands to benefit from everyone paying their taxes.
Portugal thus implemented a pioneering system that directly involved all taxpayers, called e-fatura, in which all invoices are registered by the issuers, and then confirmed by the taxpayers themselves. The Tax Authority also implemented a validation seal for invoicing software to ensure the legitimacy of invoices, ensuring that they cannot be edited once issued. This mechanism has, without a doubt, increased tax revenues and reduced fraud and tax evasion.
According to a report published by the European Commission three years after the e-invoicing system was implemented, more than 5 billion invoices have been registered each year, with more than 8 million Portuguese taxpayers registered on the Tax Authority’s website, enabling them to handle their tax affairs online.
2021 has seen Portuguese legislation requiring a QR code to be printed on all invoices come into force, aiming to streamline the registering of invoices on the e-fatura website for individual taxpayers while also increasing the control exerted on issuers, even should taxpayers not provide their tax number when billed.
However, the modernisation of these systems and increased use leads to enormous challenges to their ability to transfer, store and analyse information to ensure the continued operability of the entire system.
The proliferation of technologies such as blockchain, robotics process automation (RPA) and artificial intelligence (AI) now being used in organisations and tax authorities in each country are allowing for processes and systems to be implemented effectively, in real-time, that is more effective operationally, as well as in terms of tax collection.
However, while adopting these new technologies is highly beneficial to taxpayers (in reducing costs and simplifying processes), it cannot be overlooked that doing so also gives each country’s tax authorities a genuine fiscal “superpower”.
While this may make information analysis more objective through the detection of incoherent data using algorithms and machine learning on the one hand, it also makes it “blind”, requiring much more effective mechanisms to be implemented to ensure taxpayers are safeguarded on the other.
A document drawn up by the Organisation for Economic Co-operation and Development (OECD) in 2020 to discuss digital transformation and the new challenges faced by tax authorities presented proposals for the modernisation and implementation of new technologies adapted to solving tax issues.
As for future technological trends, everything points towards systems that come together in an interoperable ecosystem between companies, individuals and states. The security and authenticity of data will therefore take centre stage, as will establishing transparent, collaborative and less punitive governance and rules for taxpayers in a generally more effective system.
The implementation and development of these technologies is something we build with our customers here at grupoGBI, presenting blockchain, RPA, artificial intelligence and machine learning solutions that allow us to stand out in the market. Therefore we can supply our clients with the tools they need to provide their customers with true digital transformations that employ state-of-the-art solutions.
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