SIS e-Invoicing Legal Aspects Jean-Christophe Rossand Manager, e-Invoicing Services

1. SIS e-Invoicing Legal AspectsJean-Christophe Rossand Manager, e-Invoicing Services 2008 ICH User Group Meeting

2. Agenda • Introduction • Introduction to E-Invoicing • e-Invoicing with Integrated Settlement • Legal Aspects of e-Invoicing • Legal Obligations of e-Invoicing 2008 ICH User Group Meeting

3. Introduction toe-Invoicing 2008 ICH User Group Meeting

4. Airline AP System Typical paper process Airline Manager AP Clerk Supplier Print Paper Invoice Mail Invoice • Receives Paper Invoice • Checks Invoice on Paper Invoice Data Entry The typical paper process is fragmented and discontinuous Airline AP System The Internet e-invoicing process 0111000110101001001110101011 01110001101010010011101 XML Supplier Transmit Invoice Electronically Transmit Invoice Electronically 2008 ICH User Group Meeting

5. e-Invoicing in the aviation industry Carriers are already using an e-invoicing platform: • Over 270 participating airlines • Over 5,500 participating suppliers (fuel, ground handling, etc) • Plus various bilateral relationships  But carriers don’t currently use e-invoicing for settlements between themselves – just to pay suppliers  But similar relationship (supplier – customer) 2008 ICH User Group Meeting

6. e-Invoicing with Integrated Settlement 2008 ICH User Group Meeting

7. SIS follows a 2 pillar strategy to addressthe challenges of e-invoicing implementations • Address the content of e-invoicing (What information is part of the invoices): • Development and maintenance of Invoice Standards together with industry experts  e-Invoicing WG is modifying the “IATA Aviation Invoice Standard” • Address the communication part of e-invoicing (How are invoices exchanged and processed): • A web service to support and promote the exchange of e-invoices  SIS selects supplier with e-invoicing tool 2008 ICH User Group Meeting

8. Settlement Processes ICH ACH Central Repository Processes at time of Sales NFP engine ARC COMPASS™ e-Invoicing with IS • Create invoice file (where applicable) • Optionally create and verify digital signature • Optionally store e-invoice in a legal archive • Settle claims via ICH / ACH • Make invoice (incl. optional digital signature and verification) available for download Integrated Settlement (IS) IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Prorate Engine Other Billing File / Data (similar to today) Billing File / Data (similar to today) 2008 ICH User Group Meeting

9. Legal Aspects ofe-Invoicing 2008 ICH User Group Meeting

10. What makes an e-invoice a legal document? • Legal document with all required information (based on jurisdiction), e.g.: • Specific fields (e.g. Billing Company Address or VAT Registration Number) • Digital signature (if required) • “Stamp” (if required) • Depending on legal requirements, the same submission file could be a legal invoice or just simple billing data 2008 ICH User Group Meeting

11. Required Data & IS • Some jurisdictions require 14 elements on a legal invoice (e.g. VAT Registration #, VAT Amount, Billing Carrier’s Address, Billed Carrier’s Address, etc) • Some jurisdictions require the proper naming conventions (e.g. “IVA” instead of “VAT”) • Some jurisdictions require digital signature, which is string of text that is computed and sent with the signed document in order to prove: • Identification of invoicing party (“Authenticity of origin”) • File content is unchanged (“Integrity of content”) • With Integrated Settlement, the required data can be provided in two ways: • Billing carrier leaves blank, IS supplies data from airline profile • Billing carrier submits (IS will check against airline profile and, if they don’t match, will send a notification) 2008 ICH User Group Meeting

12. Life in the global environment • Problems • Variable technical skills and IT infrastructure • No universal standard applicable everywhere • Legislation not consistent, or not existent, e.g.: • EU – comprehensive rules, and strictly applied • US – fairly easy-going • Much of world – no rules at all • A few countries – specifically not legal 2008 ICH User Group Meeting

13. Some rays of hope • The way airlines bill and settle is somewhat linked to the Air Service Agreement • IATA’s ability to get airlines to agree common standards provides support in local discussions • Many airlines are still government owned or supported flag-carriers, and non-compliance with international standards can lead to exclusion 2008 ICH User Group Meeting

14. What to do… • Do you have a legal framework for e-Invoicing in your country? • If you have one, you need to understand it, and prepare to compare it with the IS specifications, when they are finalised • If you have requirements that are not covered, your first line is to discuss this with your authorities, and explain the international billing and settlement framework • RAM, ICH, IDEC, etc • How all the airlines apply these as a common international standard • What the impacts may be for your airline if you are unable to use the industry standards • Possible loss of interline relationships due to the need to bill and settle outside the ICH • Possible loss of revenue, etc 2008 ICH User Group Meeting

15. What not to do… If you have no legal framework for e-invoicing in your country: • Do not offer to meet EU standards simply because IS can!  This adds cost and complexity, possibly unnecessarily • It is necessary for airlines billing and settling with EU members to meet these standards • It should not be necessary for airlines billing and settling between e.g. SG and ZA to meet EU standards Go for simplicity wherever possible 2008 ICH User Group Meeting

16. Impact of different jurisdictional requirements • Requirements discussed are not consistent across countries • Legal requirements vary in different regions of the world • European Union – Most Restrictive (VAT) … but on going activities to simplify • United States – Less Restrictive • Other Countries - variable • IS will be configured by each airline • The applicable legislation on an invoice depends on the place of supply for the product or service being invoiced. The determination of the place of supply is complex and requires tax expertise. • To reduce risk, an approach is to systematically use the configuration of the most restrictive airline Billed Carrier Digital Signature Required? 2008 ICH User Group Meeting

17. Legal obligations ofe-Invoicing 2008 ICH User Group Meeting

18. Legal obligations for e-invoicing • Billing Party: • Create and attach digital signature where necessary • Prove conformity with e-invoicing laws • Apply VAT where applicable • Archive and prevent modification (e.g. on a CD-ROM) • Billed Party: • Verify digital signature before processing the invoice • Archive and prevent modification (e.g. on a CD-ROM) • Logging of the digital signature and key, receipt of billing, and the type of archive and any conversion for 10 years 2008 ICH User Group Meeting

19. Role of Integrated Settlement • legally mandated by billing carriers to “create” or “transport” the invoice • Where necessary, submitted billing data is “transformed” to an invoice by creating the digital signature and/or adding the reference data • IS legally mandated by billed carriers to verify the signature, archive the invoice, and log the receipt • IS also archives keys and signatures • IATA will use a “trusted company” to help to comply with local laws and to create and verify the digital signatures 2008 ICH User Group Meeting

20. Carriers’ Obligations with IS • Investigate and configure the IS airline profile and submitted files with your country’s requirements for e-invoices • Digital Signature option • E-archiving • Reference data • Etc • Ensure that your carrier complies with your local regulations 2008 ICH User Group Meeting

21. Thank you. Email: sis@iata.org SIS Web: www.iata.org/whatwedo/finance/clearing/sis/index.htm 2008 ICH User Group Meeting