7 Reasons to Add a Tax Engine for VAT Determination
In this white paper, we provide 7 reasons for adding a tax engine to manage VAT determination.
Read Time 19 Mins
Discover how to improve tax accuracy, reduce risk, and enable business growth through a tax engine.
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 organization 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.
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.
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.
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.
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VAT automation is crucial because of the immediate risk from manual and non-standardised processes. The favoured solution seems to be greater use of tax engines across the enterprise to ensure, as far as possible, that basic data are correct and correctly categorized.
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International Tax Review
Tax and Technology Forum
2019
To address these challenges, many successful multinationals have found that adding a tax engine to their ERP systems significantly improves tax accuracy and overall tax department agility. The tax engine replaces the native VAT functionality in the ERP system, eliminating the need for in-house research and ERP updates. A robust tax engine not only maintains tax content outside the ERP system, but it ensures accuracy on even the most complex transactions.
A tax engine:
A tax engine provides additional benefits beyond VAT determination accuracy and reduced manual processes.
Reduce risk and get the agility needed to support business growth with a scalable solution for VAT & GST determination.
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