One common pitfall: Thinking that Latin American processes can be easily moved into a financial shared service managed exclusively in the US. We can see those big American corporations or just international corporations, in general, are working with shared services. These shared services could be a company or a business unit that is centralizing all the business processes that can be repetitive such as accounting ones. However, too many corporations are actually putting themselves in jeopardy by centralizing everything in the country where their headquarters are based. One question should be coming to your mind right now: Is this process a step too far in the simplification of tax reporting? Keep on reading to find out!
How does this centralizing process work?
Let’s set up the decor: A company or a corporation based in the US is composed of ten different legal companies. That corporation has created one specific company for administration, and this company is in charge of the admin processes for all the corporation. This configuration is pretty common nowadays, especially in the US.
What happens when Latin American tax regulations come into play?
When these companies or corporations arrive in Latin America, they actually think that they can move the Peruvian subsidiary processes to the shared service, meaning all the reporting, all the information data to the US in order to have everything managed from the US. However, companies have to be careful regarding which process they want to transfer to the shared service based in the US.
Let’s take an example: Registered bills. Can it be transferred to the shared service? 100% yes! As it is a repetitive process and therefore can be done from anywhere in the world and even from a person that doesn’t know anything about the company or about the specific document and what is going on with it in the company, more precisely in the specific country it has been issued.
Got it… but what is the “step too far’’ then?
Back in the day, many of American-based and European-based customers were trying to transfer their tax compliance process, especially legal ledgers and another very specific process called withholding taxes from Latin America to their shared service. Dealing with tax compliance is totally WRONG! Yes, you heard it! Why you may ask? Well, simply because the local governments are always involved in every single transaction so when the shared services are trying to work with these different scenarios, they will find out that in Latin America, you’ll have to learn everything from everywhere, meaning dealing with more than eight different accounting principles. As they are used to work with US GAAP, transferring all these processes is possible but very risky and time-consuming, as the team back in North America or Europe has to follow an intense training and be aware of what is going on legally speaking at any time!
Dear LatamReady, help me out in not walking a step too far!
Our LatamReady SuiteApp is the ultimate solution to all your tax compliance problems as it includes not only e-invoicing but also e-payments, legal ledgers, and many other features for more than 14 other countries in Latin America within NetSuite. Feel free to call one of our sales rep at +1-786-600-2641 to know more! You can also find our pricing list on www.latamready.com, after that you’ll be fully on point with LatAm tax compliance using NetSuite, that’s for sure!