What does the future hold for VAT/ Tax?

At the Tax Transformation Summit in London, tax professionals from the world’s leading brands came together to discuss today’s hottest topics in the tax function: transparency, transformation and technology.  Remco Dewaerheijt, VP Tax & Product Strategy for VATBox, led a panel of industry experts in a discussion about what the future holds for VAT/Tax.

Four main areas were highlighted:

2. Emphasis on simplifications
   In the future, tax authorities will make systems simpler to use so companies can more easily report their VAT. For example, beginning January 2021, the VAT Mini One Stop Shop (MOSS) will allow businesses to pay VAT – normally paid out in multiple EU countries – in just one EU country. This means companies will no longer be required to register with multiple tax authorities in every EU country; instead, all VAT activity can be done in one place. In general, authorities will move towards greater centralisation and standardisation, says Ksenija Cipek*, Head of Tax Risk Analysis at the Croatian Tax Authority’s Ministry of Finance. John Shuker, Indirect Tax Partner at PwC, agreed, saying “at the European level, various measures have been designed to facilitate compliance and facilitate transactions at a very low cost.”
3. Explosion of eInvoicing

With 39% of invoices submitted to Tax Authorities for VAT reclaim being disqualified annually, companies are losing millions of dollars each year. Most of these invoices are rejected for seemingly rudimentary issues such as missing or incorrect information and unauthenticated invoices – all results of human error. In the future, these types of errors will be easily mitigated with an electronic invoicing platform. The practice of electronic invoicing is gaining popularity throughout the world, with Latin America and many European countries leading the way in digitising the invoicing process. Both the United States and European Union have already passed legislation requiring the use of e-invoicing for all B2G transactions and many countries are beginning to extend that mandate to B2B transactions as well. For example, starting in January 2023, France will impose mandatory eInvoices on B2B transactions. According to PwC, the next step for eInvoicing is using the blockchain, to make invoicing even faster and more secure in the future.

3. Changing staff competencies

As the digitalisation of tax continues into the future, staff competencies will expand as well. No longer will an understanding of finance and tax laws be enough. New abilities and competencies – such as being able to digitally connect with each tax authority’s portal, understanding the new and different ways that data will have to be provided to tax authorities, and the production of reports in line with that understanding will also be critical. Says Ms Cipek, “We need to educate our staff all the time.”

4. Compliance of transactional data

In the future, companies will make greater use of Big Data analytics to improve compliance. According to Jose-Manuel Pedron-Garcia, Global Tax Compliance Process Leader at Michelin, producing the transactional data required for tax reporting and compliance represents a challenge for multi-national corporations, where enterprise resource planning (ERP) systems cannot always keep up with changing tax requirements. He says, “The speed that the authorities move to make changes and the tools that they have are far away from the possibilities that many companies have, as well as far beyond the budget that many companies have for making those changes.” In the future, companies must incorporate tools that will help them translate extensive VAT knowledge into rules that validate data and complete missing information, analyse every transaction and build a solid audit trail.

If you’re a company looking to ensure your business succeeds in the future, VATBox can help. To learn more about how VATBox’s innovative platform empowers financial professionals to make strategic decisions based on their transactional data while ensuring unrivalled compliance and savings, click here.

Click here to watch the entire Tax Transformation video series

*Views expressed are personal and do not necessarily reflect the position of the Croatian Tax Authority’s Ministry of Finance

The post Experts weigh out on the future of VAT appeared first on VATBox.