The global value added tax (VAT) cycle is so demanding and the rules change so frequently, it’s all too easy to get stuck in heads-down mode, with all attention focused on day-to-day processes. But it’s good from time-to-time to take a step back and look at the broad outlines of VAT management. That’s especially true when big changes are unfolding, such as tax authorities’ moves toward near-real-time reporting, such as VAT SAF-T type requirements and Spain’s SII initiative.
A new Vertex white paper Using Tax Technology to Strengthen End-to-End VAT Management provides a big-picture view of VAT and its challenges, while treating VAT management as a cycle of three interlocking processes: tax determination, compliance and audit, and data management and analytics. Each segment of the cycle “poses its own unique challenges for automation and centralization,” according to co-authors Andrew Hallsworth, senior solutions engineer and VAT subject matter expert, and Danny Vermeiren, VAT director. Each of those issues can be addressed with the right tax technology.
Read the white paper to learn how today’s tax technologies can help businesses tackle the most vexing VAT challenges, including:
- Multiple VAT registrations. When a company is operating in multiple countries, a mistake in the registration number for a particular transaction could result in it being reported to the wrong tax authority.
- Incorrect A/P invoices. When vendors charge the wrong VAT or fail to meet reporting requirements, the receiving company is exposed to risk. The risks are especially high for businesses that have outsourced their accounts payable (A/P) operations.
- Variation in reporting requirements. The level of detail required varies widely, with some jurisdictions requiring “almost microscopically granular” reporting. Some of the data required may not be available through an ERP system’s financial modules.
- Fragmented data. Important tax data often resides in multiple systems, including ERP, e-Commerce platforms, procurement tools and T&E applications. Retrieving and collating the data is frequently conducted via a heavily spreadsheet-dependent process, with a consequent risk of inaccuracy.
- Audits. When an audit is announced years after a filing, businesses often strain to pull together the historical data they need to respond. Discrepancies can result in negotiation of payments to authorities and the amounts can be significant.
If any of these challenges sound familiar, it may be time for your organization to investigate the latest advanced tax solutions. This report is a good place to start.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.