Handling VAT exclusively with your native ERP leaves your tax team spending too much of its time manually researching rates and rules, and constantly updating the ERP—ultimately putting your organisation at risk for audit penalties, tax operation inefficiencies, and inaccurate tax calculations.
In this post, we'll discover how these challenges can be easily addressed with a tax engine for VAT automation.
What is a Tax Engine and How Does It Work?
A tax engine is a 3rd party system that integrates with the ERP system and replaces the native VAT functionality in the ERP system. It eliminates the need for in-house tax research and ERP updates, and improves VAT determination accuracy.
- Provides the VAT calculation for every AP/AR transaction in real time
- Maintains the latest tax rules, rates, & taxability logic for the ERP system
- Allows tax staff to easily create custom tax rules based on business
The Changing VAT Landscape
As VAT complexity increases, it’s demanding more of tax departments across Europe. You’re balancing the need to reduce VAT risk while also enabling business growth into new product lines, new channels, and new markets.
The Need to Automate
While every individual VAT calculation must be accurate, local governments and in-house Governance & Risk are turning their focus to the foundational systems and processes that underpin VAT determination and introducing automation to improve accuracy and control. The manual process of tax research and updating ERP systems can be a significant cause of VAT inaccuracy, and a prime target for automation. Maintaining up-to-date rules and rates is just part of the challenge, though. Even with updated tax content, your native ERP system functionality will not completely support your VAT determination needs.