Tax functions are hardly the only part of the organization grappling with growing complexity. A similar dynamic holds across a range of corporate functions, including procurement. Dealing with tax requirements after the fact can result in procurement overpaying taxes to vendors while escalating the company’s audit risk. As such, procurement functions are increasingly adopting automation to accelerate their payables processes and applying strong business validations to transactional elements, such as vendor data, product description and financial invoice details.
In-house value added tax (VAT) professionals will be keen to ensure that this enhancement to cost control is matched with a parallel investment in appropriate tax risk controls. It is important the vendor’s VAT treatment is checked and understood when the invoice is recorded by the purchasing business. In an optimized VAT procurement process, VAT errors are captured by validation before the invoice is cleared for payment. Tax technology enables the purchasing business to ensure vendors have accurately calculated VAT and correctly recorded the tax treatment in their invoice transmission. Inconsistent or unfitting vendor VAT treatments are escalated for review, and validated VAT calculations are approved for payment. As well as providing a real-time validation of vendor tax treatments, applying a VAT determination solution also ensures additional compliance.
Vertex partnerships with SAP Ariba and Coupa should come as welcome news to procurement and tax leaders as they work together to reduce complexity. Combined with Vertex expertise and content for input VAT determination, our integrations support the requisition and invoice reconciliation phases of the tax lifecycle.
These powerful platforms connect millions of suppliers and customers across direct and indirect expense categories, offering an end-to-end automated system, removing complexity and allowing buyers and suppliers to manage everything from contracts to payments, all in one place. The solutions also perform the important procurement control tasks of validating transactions, ensuring the invoice matches the purchase order and the materials/services received.
Integrating Vertex solutions into procurement platforms reduces the cost and time of tax calculations associated with those transactions while reducing risks of overpayment and audits. We’re proud to offer our global customers robust integrations to address and ease the burdens of procurement and look forward to adding more partnerships to deliver additional value soon.
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.