VAT compliance and reporting can place a major burden on IT teams. With customizations required for every jurisdiction, constantly changing regulations, necessary integrations with government portals and a variety of data submissions and reports required, compliance can quickly erode IT’s time for other projects and innovation.
Constant fire drills are only the tip of the iceberg when it comes VAT compliance and reporting challenges for IT.
While VAT compliance may seem like an issue for the tax department, its implication on IT are immense. Governments worldwide are implementing technology-driven requirements, draining IT resources to keep up with these changes and develop and maintain the necessary integrations and reports. These challenges are now multiplying as more and more countries begin to implement measures to increase visibility into corporate transactions and operations. In fact, Sovos’ recent report on VAT compliance in Europe showed that one-third of countries are implementing more intensive compliance measures in the near future, and that doesn’t include the frequent changes to existing regulations. For example, Spain issued two updates to its SII initiative – in less than 6 months after initial implementation.
Some companies choose to manage this burden in-house – requiring time-intensive IT projects and frequent updates. This approach typically only scratches the surface of compliance needs – meeting minimum requirements, potentially missing updates and overlooking the opportunity to drive more effective compliance. Others outsource to local vendors – but the constant project management and support required to manage so many solutions can be just as cumbersome as managing compliance internally.
An end-to-end VAT compliance and reporting solution alleviates these challenges and offers opportunity for innovation.
IT teams that move beyond these two approaches and adopt a strategic, proactive, long-term compliance approach will save money and resources – and those benefits will compound and compound as requirements expand across the globe.
A proactive, end-to-end solution eliminates the compliance burden on IT, providing:
- Acquiring Capability
- Cloud-based solutions automatically keep up with the pace of change – from major shifts in requirements to daily fluctuations in exchange rates.
- Regulations and mandates are translated by regulatory counsels, designed and implemented by IT teams with experience in the most complex mandates (e.g., Latin America), and tested by tax managers.
- Simplifying Operations
- Data flexibility – Integrations via SFTP, API or Real Time Connector (RTC) provide the flexibility needed to extract government required data from any ERP or billing system and submit it seamlessly to tax authorities.
- Data enhancement and enrichment – Filing and data cleansing is often a manual process and fire drill around periodic reporting, but leveraging an intelligent solution, companies can apply inclusions and exclusions automatically, creating business processes around compliance.
- Workflows – Create smarter, automated workflows for data management and reporting.
- Decrease Costs and Mitigate Risks
- Centralization – A single solution instead of one in every country, eliminates implementation, maintenance and support nightmares and reduces costs.
- Validation – Run internal audits and verifications before data is submitted to ensure accuracy.
- Security – All data is fully encrypted, housed and transmitted securely.
A proactive approach to VAT compliance and reporting can minimize IT’s role in this complex web of regulations, eliminating hassles and reducing costs. Contact us to learn how much time your IT team could save.