In an interview with JE, Sophos' VP of Sales in EMEA, Elsem Ciric, said Portugal is a mature country when it comes to tax compliance. But successive postponements of the introduction of mandatory digital invoicing for SMEs are delaying the country considerably.
Are there any peculiarities in the Portuguese market that are not available in other markets? Or is it a gray market for Sophos, similar to Spain or Greece?
No no. Firstly, Portugal is one of our three centers of excellence. So this is very important globally for Sophos. Portugal is very important. In Portugal, tax regulations and compliance are in a very mature state. You are at a very advanced stage compared to other European countries. Portugal is in the top 3 or top 2 countries in the EMEA (Europe, Middle East and Africa) region that was the leader. That is why the experience we gain in Portugal as a company is so important. And the customer experience with us is very important. Portugal has been a pioneering country from the perspective of tax regulation in the EMEA region.
He then says that Portugal was very competent in setting regulations for tax collection. And that?
(He laughed). We acquired PetaPilot and Safety in 2021. We currently have 18,000 customers in Portugal. Some are national, others are global multinational companies. We have SMEs and small businesses as well. The government in Portugal itself, as well as companies, benefit from the B2G (business to government) mandate. This is very important. Private companies benefit from digital compliance services solutions. This is very important, and as I said, the same thing is happening globally. You are one of the pioneers in Europe, the Middle East and Africa. This is good not only for the government but also for all companies to be compliant [com as regras]To mitigate the risk of non-compliance at any time. What we are waiting for – and have been waiting for for a long time – is the new mandate: electronic invoices. It was supposed to be mandatory a few years ago, especially for small and medium-sized businesses (B2G and SMB). Because big companies are already obligated to do so. In recent years, we have had several postponements.
What reasons have been given for these postponements?
We believe that the government believes that PDF invoices are sufficient in the first place. It could be that. One reason may be that the government believes that PDF images are sufficient for the digital transformation of corporate systems and billing processes. You may also find that the cost of invoicing for some small businesses may be a factor to consider. This may be the second reason, especially for SMEs and small businesses.
What does Sophos think about this?
What we believe is that e-invoicing is not a technical change. It is more than that. It is an opportunity to improve operational efficiency in companies. And postponing… Well, frankly, we think that adopting it could save companies and the government mistakes and problems. They will not be able to avoid some mistakes. Once again: streamlining processes for businesses and government, and simplifying transactions, is very important. We believe that these issues negatively impact business operations.
In this regard, is Portugal lagging behind? Are we late?
Yes, they are falling behind.
Regarding which countries in Europe? Which EU Member States have already adopted this mandatory measure for digital invoices?
We already have Italy, the UK, Turkey and Romania. Poland is currently on its way. France, for example, is an immature country [nesta matéria].
Does Sophos have any idea what Portuguese companies are saying about introducing mandatory digital invoicing?
A global survey we commissioned indicates that 82% of companies fear they will not be able to comply with regulations in the near future. They are afraid of that. 90% fear increased costs associated with complying with regulations. If we conducted the same investigation in Portugal, the result would likely be very similar. Because the research done for us is based on reliable sources such as Bloomberg and Accenture. Businesses are worried. We are in a digital age, and frankly, no company has time to fall behind the competition. Competition in every country, and in every sector, is very high and companies are trying to maintain their growth rates and stay profitable. The main way to achieve this is to use your resources and budgets very efficiently and reduce costs through digital transformation.
We all have an idea of what a PDF invoice is. What are the features and characteristics of this electronic invoicing?
The big advantage is the exchange of data between government agencies, companies and the rest of the ecosystem. So, it's not just the visual aspect of the bill. The real data is there. Businesses can analyze the data and invoices they receive and accounts payable and accounts receivable transactions. On the other hand, the government will be able to audit it through actual transactions. It will save them from paper, and from any risks, including surprise audits etc. Therefore, it is real data that flows, securely, between government and corporate systems, through a trusted solution provider and reliable platform. They are servers talking to servers and this is already happening in Portugal, and in many markets, with large companies and with companies supplying the country. It already works this way for big companies.
What will change in this area in 2024?
We serve over 100,000 customers; Companies in more than 100 countries. This includes half of the Fortune500 companies. We're happy with that, but for 2024 we wanted to be a game changer for the market and for our competitors. That's why we launched Sovos Tax Cloud on February 20th. This was very important, because it is the first and only solution in the industry that standardizes tax compliance globally. It's very interesting and important. And it's not just tax compliance…under the same umbrella, there's also reporting to regulators.
Did Sophos think it was losing market share because it was targeting large-cap companies? Big companies?
No no. The thing is, over the last eight years, Sophos has spent about two hundred million dollars building out the Sophos Tax Cloud. This didn't happen because we wanted to reach different customer segments. It happened because we wanted to change the rules of the game when it comes to tax solutions and service providers. This investment integrates almost all ERP solutions for businesses using e-commerce technology. Therefore, we have become an ecosystem.
So what is the reason?
The reason for joining, as I said, was that 82% of companies believe they are more vulnerable to tax-related compliance risks. That's 82%, according to Bloomberg research. 90% of companies expect a significant increase in their costs to ensure tax compliance. This is research from Accenture. Industry, buyers and companies are very concerned about increasing compliance needs. That's why we invested in Sophos Tax Cloud.
What does this service allow?
It varies from one country to another, and from one organization to another. We have 19,000 jurisdictions and 19,000 different tax regulatory areas or regions. So, for all businesses in all sectors, there is a need in your jurisdiction, in your country. Some of them need to be integrated into the public cloud; Some are further “embedded” into their enterprise resource planning (ERP) systems, and into their purchasing systems, with integration with e-commerce, to ensure tax compliance. It's not just about one type of company. It's a solution that fits all sizes of businesses in all sectors, in 19,000 jurisdictions and over 100 countries.
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