Modernization of Fiscal Management with QR Code and OCR - Impacting Digital

Financial and fiscal management for governments is a complex and crucial process to ensure the efficient use of public resources. With thousands of transactions and expenses being recorded regularly, it is essential to have efficient mechanisms to collect, process, and store taxpayer information. The accuracy and speed of this process directly impact decision-making, government transparency, and the identification of possible deviations or errors. Therefore, the adoption of new technologies is essential to facilitate these processes.

I. The Role of OCR and QR Code in Automating Administrative Processes

Optical Character Recognition (OCR) and QR Code have played a fundamental role in automating administrative processes. OCR, for instance, allows for automatic extraction of invoice information by converting printed text into digital data. This significantly reduces the need for manual data entry, minimizing errors, and accelerating information capture.

On the other hand, QR Code offers a compact and secure storage solution for invoice information. This code can be easily scanned and stores relevant data such as the supplier’s tax identification number, date, value, and other important details. The combined use of OCR and QR Code enables the complete digitization of the process, from invoice reception to storage. This ensures more efficient management and a modern, agile, and transparent government administration.

II. Electronic Invoicing in Portugal

In 2023, Portugal is making significant advances in invoicing and digitization. One notable change is the expansion of electronic invoicing for Business to Government (B2G) transactions, including not only large companies but also medium and small enterprises.

The use of QR codes on invoices has been a crucial step in this process. QR codes, which stand for “Quick Response” in English, are two-dimensional matrices of points that can contain various types of information. In the context of invoices, QR codes provide relevant details such as the invoice number, issuance date, issuer’s tax identification number, content description, taxable base, VAT inclusion, and total value.

The obligation to include QR codes on invoices was established by Decree-Law 28/2019 approved by the Council of Ministers and took effect on January 1, 2022. The main reason behind this measure is to combat fraud and tax evasion more effectively and also facilitate expense deductions for taxpayers.

III. Updates on Electronic Invoicing in Spain

Starting from January 1, 2024, invoices issued by entrepreneurs and professionals in Spain must also include a QR code, similar to Portugal’s requirements. This is established by the Regulation that defines the requirements for computer or electronic systems and programs supporting invoicing processes for entrepreneurs and professionals. It also encompasses the standardization of invoice record formats.

This Regulation arises from the need for adaptation, modernization, and compliance with the standardization requirements of computer systems and programs used by freelancers, small, and micro-companies. It ensures interconnection and compatibility with the computer programs of clients, suppliers, and administrations while helping to prevent data tampering and manipulation.

IV. Benefits of Using QR Code and OCR

The adoption of QR codes on invoices aims to boost the digital transition of companies, bringing several benefits. Firstly, it facilitates the communication of relevant tax documents to the Tax Authority (AT), making the process more agile and efficient. Additionally, it allows for better control of operations conducted by taxpayers, contributing to combatting informal economy, fraud, and tax evasion.

For consumers, QR codes simplify the inclusion of expenses that can lead to IRS discounts, with the future possibility of an application that automatically reads and communicates the information to the finance portal. For companies, this measure promotes the adoption of electronic invoicing, increasing productivity by encouraging the use of modern technologies in invoice and accounting document issuance.

Furthermore, security is a crucial concern in managing government information. OCR and QR codes contribute to data security through encryption and authentication. This ensures that only authorized individuals can access sensitive information. The security measures are crucial in safeguarding financial records’ integrity and ensuring transparent, reliable government operations. Consequently, they foster a safer and more trustworthy work environment.

V. Conclusion

The adoption of Optical Character Recognition and QR Code will bring numerous benefits to invoice management in Portugal and Spain. Through OCR, invoice information can be automatically extracted, reducing errors and expediting processing. On the other hand, QR Code enables secure and compact storage of data. This facilitates access and integration with financial management systems. These technologies provide better expense control, reduced physical storage expenses, and a more efficient and transparent administrative process.