Connected Supply Chains Drive Complex VAT Compliance

July 30, 2018

As cloud-connected technology has become more ubiquitous across the supply chain, sophisticated executives can use the data gleaned from these devices to better understand where their supply chain is operating effectively – and where there is room for improvement – including in VAT compliance.

Increased transparency into how the various links in their chain fit together allow forward-looking companies to find redundancies, bottlenecks and other impediments that undermine production and, ultimately, profitability.

In recent years, companies have moved to greater automate their factories from design to delivery, connecting elements of their assembly lines with the cloud to create a contiguous end-to-end digital ledger that allows for greater analysis. Records of current inventory, material shortages, stoppages and more can be scrutinized using sophisticated AI and machine learning techniques to find enhanced efficiencies, and these files can be sent electronically to department heads, executives and vendors in real time.

The rise of data-driven manufacturing processes presents an opportunity for savvy supply chain and operations executives who now have more resources available to them than generations before, or even their predecessors just a few years ago. However, a fully-connected supply chain is a powerful resource for more than just operations and supply chain departments. Data-driven manufacturing processes also provide greater transparency for tax and finance executives, and facilitate compliance with today’s increasingly complex eInvoicing, eAccounting and eLedger requirements.

These professionals can leverage greater visibility into the supply chain to track inventory as it is created, used and moved with greater accuracy for compliance, particularly in countries with VAT systems and stringent reporting laws.

Compliance Advantages of a Connected Supply Chain

For manufacturers with a global footprint, VAT compliance is a major challenge. Regulations are complex and carry tough penalties for violations, including fines and operational delays, which can negatively impact the bottom line. In addition, tax laws vary not only from country to country but also at the local and regional levels.

In the most complex environments, governments are requiring detailed supply chain data. For example, in Brazil, manufacturers must use radio frequency identification (RFID) trackers to track goods from the warehouse to their final destination. And by January 2019, companies will need to comply with Bloco K — requiring new reports, internal tracking and documentation processes for inventory.

Because of this, multinational companies need solutions that work at the speed of business. Connected supply chains facilitate this new era of inventory tracking and reporting.

In Latin America and Europe, mandated e-invoicing and VAT reporting requirements can be addressed more easily through automated devices connected with Sovos’ Intelligent Compliance Cloud. This solution offers comprehensive reporting within existing systems of record while reducing audit risks and improving cash flow.

Take Action

To learn more about Sovos’ cloud-based manufacturing VAT compliance solutions, contact one of our product experts.

Sovos is a global leader in tax compliance and business-to-government reporting software, safeguarding businesses from the burden and risk of compliance around the world. As governments go digital, businesses face increased risk and complexity. The Sovos Intelligent Compliance Cloud combines world-class regulatory analysis with a global cloud software platform to create an adaptable, connected and global compliance solution that keeps businesses ahead of the ever-changing regulatory environment. Sovos supports 4,500 companies, including half of the Fortune 500, and integrates with a wide variety of business applications. Based in Boston, Sovos has offices throughout North America, Latin America and Europe. For more information visit and follow us on LinkedIn and Twitter.

Relevant Posts

New York Implements Economic Nexus by Resuscitating 1980’s Law

When New York first passed its law defining what constitutes a “vendor” subject to collecting sales tax in the 1980’s, the idea of online shopping sounded like science fiction. In retrospect, NY may have effectively enacted the first “economic nexus” law when they drafted their definition of “vendor” to include a person who regularly or […]

Read More
IRS Uses Unprecedented Methods to Enforce ACA Reporting Penalties

With recent enforcement measures, the IRS has offered definitive proof that the Affordable Care Act (ACA) is still alive and that the agency plans to strictly enforce ACA reporting. Last spring, the agency issued Letter 226J to Applicable Large Employers (ALEs) that failed to cover 95 percent of employees. ALEs are companies with 50 or […]

Read More
Government Shutdown Will Not Move IRS 1099 Reporting Deadlines

UPDATE (Jan. 8): Reporting season is moving forward according to plan. The IRS has announced that it will process tax returns on schedule and without delays. While the agency will clarify its contingency plan in the coming days, organizations should proceed as planned with 1099 reporting and other seasonal filings. The IRS will recall a […]

Read More
4 Big Post-Wayfair State Sales Tax Developments to Watch 2019

The South Dakota v. Wayfair decision last June has created a lot of angst for indirect tax professionals and the businesses they work so hard to protect from the burdens of sales and use tax filing. Six months later as we begin the new year, that angst has not gotten any lighter. Any federal legislative […]

Read More
The 5 Biggest Stories in Indirect Tax Compliance 2018

2018 was a volatile year in indirect tax compliance for tax, finance and IT professionals worldwide. With an increase in globalization and tax gaps surpassing tens of billions in some countries, it’s not surprising that one of the biggest challenges governments are addressing is revenue collection. Like enterprises, governments are creating new, technology-driven processes to […]

Read More