Taxes can be evaded, tax technology can’t

Taxes can be evaded, tax technology can’t

Along with other business processes, taxation is finally well on its way to be highly automated. Being a typical ‘uncool’ back office activity, it just took a while longer. It may actually turn out to be a blessing in disguise to many Tax Managers who have been reluctant to adopt tax technology so far. Please allow us to explain, without too much detail.

Transparency and compliance

Tax technology, or simply Taxnology, improves efficiency by allowing members of the tax team to focus on other tasks instead. So far nothing new we assume. So how about other benefits such as increased transparency and cooperation, or the increasing possibilities to enhance your taxation processes by applying analytics or monitoring? If these arguments are not persuasive enough, only one more reason remains that is gaining momentum: compliance with tax regulations.

Closing revenue gaps

In an earlier blog we already explained that the (HMRC) Making Tax Digital for VAT programme requires certain companies to keep VAT records digitally and file their VAT returns using MTD compatible software. And then there is the OECD’s BEPS project (Base Erosion and Profit Shifting) and its country-by-country (CbC) reporting initiative which are both driving increased transparency and cross-border information sharing. As a result of limited resources and increasing demands to close revenue gaps and minimize tax evasion, governments around the world are rapidly ramping up their technology and analytics capabilities.

From e-filing to e-auditing

The degree of digitalization requirements varies between countries, meanwhile ranging from e-filing (the use of standardized electronic forms for filing tax returns, for instance in The Netherlands and the US) and e-accounting (submitting accounting or other source data to support filings, for instance in Germany and Belgium) through to e-auditing in Russia and Brazil. All in all, Tax Authorities around the world are getting more and more ‘intelligent’ by applying digital possibilities. They may even become frontrunners in applying digital techniques. The big question for Tax Managers is how they will cope with the new tax rules and digital reporting requirements?

Easing the burden

Of course it may seem logical to apply a country-specific solution for new VAT reporting and compliance rules at the moment the new rule must be applied. However, looking at the pace at which changes are taking place in different countries, we strongly recommend implementing a standard framework and ask Taxnology specialists to apply the country specifics when needed. In this way, Tax Managers will find more time to focus on accuracy and compliance of the data instead of becoming involved in IT projects per country all the time. Being experts in tax technology ourselves we help Tax Managers to ease the VAT IT burden on a daily basis. Feel free to contact Henk Tiesma at h.tiesma@4apps.com and he will tell you exactly how we do that.

Deel