E-Invoicing in Canada
On Feb. 17, 2017, e-Invoicing was introduced in Canada, due to the adoption of Universal Business Language (UBL) as a national standard.
In 2018, the Business Payments Coalition e-Invoicing Subcommittee, which was sponsored by the United States Federal Reserve Bank of Minneapolis, was established. This sought to study electronic invoices in the U.S., Mexico, and Canada. The Canadian Revenue Agency (CRA) then published a circular on electronic invoices, including the corresponding guide. This was intended to promote the use of electronic invoices in the country.
According to the Billentis report 2021, the optimization of internal processes is still preferred, but collaboration and electronic interaction between trading partners are also increasing. Besides, end-to-end electronic processing of business invoices is to be made possible.
Is electronic invoicing mandatory?
Generally, electronic invoicing is allowed in Canada, but it is not mandatory. If one decides to issue invoices electronically, it is recommended to keep evidence of integrity and authenticity. Invoices are stored for six years from the end of the fiscal year in which they were issued. It is possible to store invoices abroad, provided that they can be accessed online.
Legal requirements for e-Invoicing 2021 in Canada
E-invoice requirements according to the circular of the Canada Revenue Agency (CRA)
- the storage process must guarantee and store the accuracy, security and integrity of the data before invoices are exchanged
- documents describing the relevant business and operating system, as well as documents that include the way transactions are processed and managed, must be stored by trading partners
- data exchange standards compatible with CRA´s audit software are used for this process
- companies and organizations have to store back-up data
As of 01 July 2021, it is also planned to introduce:
- the traditional „carrying on business“ test, which determines whether a non-Canadian seller must collect taxes in Canada, is abolished
- many non-resident sellers have to collect taxes on sales to Canadian customers
- online marketplaces must collect taxes of their customers
- simplified registration and remittance for newly obligated taxpayers and platforms
Advantages of e-invoicing for Canadian companies
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