In Part I of this blog post I introduced you to the main ‘need to knows’ with International tax compliance and how NetSuite handles it. We tackled some important definitions and considerations when undertaking an international implementation.
For Part II, let’s dive head first and answer two important questions:
- How does NetSuite support international statutory compliance requirements?
- Where can you get more information if you’re thinking about implementing NetSuite across multiple countries?
HOW DOES NETSUITE SUPPORT INTERNATIONAL STATUTORY COMPLIANCE REQUIREMENTS?
NetSuite supports customers in meeting statutory compliance requirements through a combination of product capabilities, continued product development with a defined international road-map and a global support team staffed in part by locally certified CPAs.
First, let’s talk about the various financial system certification that you will find throughout the world, before outlining the functionality within NetSuite’s core capabilities that support international statutory compliance.
Certification – Financial Systems
Internationally, requirements for the certification of financial systems vary widely. Most countries do not have a certification program nor statutory requirements, but there are a few countries in which certification is a statutory requirement. Currently, as of 2016, these include:
In other countries, while certification is not a statutory requirement, it is “encouraged”. Countries in which certification is “encouraged” include:
The terminology and meaning of “certification” also varies internationally e.g. Certification vs. Registration vs. Accreditation as does the certifying body/agency. For example, the UK has accreditation by an Accountancy body.
So, whose responsibility is it to obtain certification? In Germany and Portugal for example, it’s the software vendor. In China and the Philippines, customers have to apply for certification, but a local partner can assist with the application and certification process.
Reasons for certification requirements and the nature of the certification process vary considerably country by country. In Germany, certification is based on a review of the full financial system by external auditors. In Portugal, certification is for tax verification purposes (sales invoices only). Whereas in Singapore, software vendors are encouraged to demonstrate GST compliance.
The table below shows the countries in which NetSuite has an existing certification. Note though the differences in who owns the certification – this can be NetSuite, the customer or even a local partner. Statutory requirements are subject to change at anytime, so be sure to check for up to date certification requirements at the start of your next NetSuite implementation.
Tax Calculation & Reporting Capabilities Overview
Did you know over 160+ countries have VAT, GST or Sales Tax regimes? NetSuite’s core capabilities supporting international tax requirements include:
- Tax engine supports 100+ countries for tax calculation and reporting
- 50+ countries pre-configured with localized reports
- Tax codes and rates pre-configured for each localized country
- Tax Reports easily generated in familiar localized format with full drill-down
- European Union Cross-border trading reports
- Other countries supported by using values from the generic reports and optional configuration to create additional local reports if required
- Online Filing Ready
- Europe: Austria, Belgium, Czech Republic, Denmark, Germany, UK
- Other: Mexico, Philippines
- Tax Audit Files
- Standard Audit Files (SAF-T or equivalent) for tax and external auditors
- G/L data export capabilities
Below you can see the full list tax reports that are localized of out-of-the box. Note that this list includes also includes reports that are supported by local partners. The very last column also illustrates countries in which there are no sales tax requirements at present.
Here below is also the full list of countries for which the tax codes and reports can be configured i.e. they are not out-of-the-box ready to go. These countries includes:
Helpful to know, as of 2016, there is also no additional charge for NetSuite’s International Tax Reports SuiteApp!
Tax Audit Files
There is a growing trend amongst tax authorities and external auditors to ask or implement regulations that require tax audit files. The formats of these supporting files are non-proprietary and contain General Ledger details including tax.
NetSuite supported countries and formats:
- Germany: GDPdU
- France: Fichier des écritures (FEC) or Fischier Standard d’Audit pour les Taxes (SAF-T)
- Mexico: DIOT and eAccounting
- Portugal monthly submissions
- Philippines monthly submissions and books of accounts audit files
- Singapore: IRAS Audit File Generic OECD adopted SAF-T
NetSuite provides support for Withholding tax through the NetSuite Withholding Tax SuiteApp. There is currently no additional charge for using this SuiteApp.
The Withholding Tax SuiteApp provides the following functionality:
- Withholding tax code records
- Different tax points – accrual or payment
- Different tax base – gross/net/tax amounts
- Determination and calculation
- Withholding tax reporting
- Sales/Purchases by Withholding Tax Code
- Tax Withheld by Vendor/Tax
- Withheld by Customer
- Pre-configured for the Philippines
NetSuite electronic payments functionality lets you generate payment files that contain instructions for facilitating electronic fund transfers between bank accounts to process payments in addition to payment discount and credits for:
- Vendor Bills
- Employee Expenses & Commissions
- Customer Direct Debits and Refunds
It can also generate Positive Pay files that are used by banks for check fraud protection.
Key functionality / features:
- International bank file support
- 59 packaged formats
- 30+ custom formats developed by NetSuite PS
- Enterprise-level performance when required
- 1 script queue can process 5k payments per hour
- Payment Management
- Features include queuing, payment rollback, reversals, and bulk automated email notification
- Option to reorder payment batches into queue
- Parallel processing available using SuiteCloud Plus
- Payment approval routing
Internationally supported electronic payment formats include:
Accounting Standards & Financial Reporting
NetSuite offers flexible options to support international statutory compliance including:
- OneWorld module for multiple international subsidiary and joint venture management
- Financials & Reporting
- Multi-book accounting
- Multiple Fiscal & Tax calendars
- Local format Income statement and Balance Sheet
- 190+ Currencies with automated rate update
- Multi-currencies customers and vendors
- User interface in 20 languages
- Print customer/vendor/partners documents in any Unicode language
- International Formatting
- Currencies and numbers
HELP! I OPERATE A MULTI-NATIONAL COMPANY AND I WANT TO IMPLEMENT NETSUITE. WHERE CAN I GET MORE INFORMATION?
Big Bang ERP is comprised of a team of NetSuite experts equipped with years of experience in implementing NetSuite for multi-national companies. Do not hesitate in reaching out to the skilled team to get the ball rolling on your project.
Noura Panaritis, Director of Client Services
When it comes to what to consider when implementing an ERP globally, Noura can advise senior leadership on how to manage localized requirements including multiple currencies, multi-book accounting, transactional taxes, such as VAT and GST as well the financial reporting requirements that vary from country to country.
Noura brings a wealth of experience gained from 15+ years of managing multi-million-dollar technology driven change initiatives and leading global cross-functional consulting teams in support of global multinational ERP implementations for well known companies.
You can usually find Noura online sharing about SaaS news and insights on strategic and tactical factors for successful NetSuite and ERP implementations around the world with a focus on Europe, Middle East and Africa.
Keep up to date and connect with her on Twitter: http://www.twitter.com/nourapanaritis
Jeekeshen Chinnappen, Director of Business Development
Jeekeshen has more than 5 years of expertise in Cloud Business Solutions and Business Analysis. Having worked in multi-national companies such bloomberg, Jeekeshen is also a member of the National Business Development Association and Mensa International.