Manufacturers Usher in the Digital Transformation of Tax

Sovos
August 16, 2018

“Since virtually every decision or transaction undertaken in a business has a tax implication, and since the digital transformation is leading to entirely new business models such as centralization of certain functions into regional or global shared services centers, tax needs to adapt— quickly—to align with and be relevant to the increasingly digital and automated enterprise.” – Deloitte, Tax Compliance in a Digital World

Digital transformation has taken hold in businesses across the globe, with departments rushing to adopt digital-first approaches to drive efficiencies, gather new insights and cut costs. Digital transformation is a common topic among R&D, supply chain, operations, manufacturing and HR teams, but innovative tax teams are also welcoming digital transformation.

Often facilitated by technology-driven tax laws, this digital transformation of tax is nowhere more prevalent than manufacturing.

Global manufacturers are often among the first targeted by complex eInvoicing and eAccounting requirements, giving tax authorities visibility into every single business transaction. With complex supply chains, frequent cross border transactions, and often high value inventory, manufacturers offer governments a rich opportunity to improve tax collections by ensuring 100% tax compliance accuracy.

But these rigid regulations actually help manufacturers usher in the digital transformation of tax by requiring the centralization and standardization needed to automate processes. With these regulations, manufacturers running SAP can more easily extend their digital transformation efforts into the tax department to find efficiencies, increase accuracy and keep up with the changing regulatory environment.

What does digital transformation in tax look like?

  1. Centralization – To truly transform tax, businesses must have centralized processes and data. For multinationals operating in Latin America and, increasingly, Europe, this is already a prerequisite for efficient, accurate compliance with changing VAT regulations. Centralized oversight into VAT compliance reduces the risks of errors and manipulation, and technological adoption is the only way to achieve such centralization.
  2. Standardization – Since many countries are now requiring standardized eInvoicing and VAT reporting, multinational manufacturers also have a leg up on the second step of digital transformation – standardization. With standardized processes and data, companies can drive efficiencies and cost savings while developing greater insights into risks and liabilities.
  3. Automation – Automation is where the digital transformation of tax is truly transformational. Companies can automate routine tasks to increase efficiency and allow talent to focus on innovation. But the power of automation goes well beyond that. With data analytics and automation, tax departments can proactively identify problems and opportunities, becoming more valuable to the company as a whole.

Take Action

Shared service centers are one way manufacturers are achieving centralization, standardization and automation to drive the digital transformation of tax. Download our Shared Services Playbook for a guide to adapting tax for proactive, future-focused global VAT compliance and reporting.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Sovos

Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes. More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than three billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates.
Share this post

North America Tax Information Reporting
March 22, 2024
Market Conduct Annual Statement Reminders and More

On the second Wednesday of each month, Sovos experts host a 30-minute webinar, Water Cooler Wednesday, to share the latest updates on statutory filings. In March, Sarah Stubbs shared information about the many filings due after March 1, from Market Conduct Annual Statements to health supplements for P&C and life insurers writing A&H businesses and […]

North America ShipCompliant
March 21, 2024
How Producers Can Build a DtC Shipping Market

Direct-to-consumer (DtC) shipping has become one of the leading sales models for businesses of all sizes and in all markets. The idea of connecting directly with consumers is notably attractive, as it helps brands develop a personal relationship and avoid costly distribution chains. Yet, for all its popularity, DtC is often a hard concept to […]

North America ShipCompliant
March 20, 2024
Key Findings from the 2024 DtC Beer Shipping Report

This March, Sovos ShipCompliant released the fourth annual Direct-to-Consumer Beer Shipping Report in partnership with the Brewers Association. The DtC beer shipping report features exclusive insights on the regulatory state of the direct-to-consumer (DtC) channel, Brewers Association’s perspective and key data from a consumer preferences survey. Let’s take a deeper dive into some of the […]

March 20, 2024
As the World Gets Smaller, Think Bigger About Global Tax Compliance

For the past few weeks back, my colleagues and I have been talking a lot about the importance of a global strategy when it comes to addressing today’s modern tax environments. On the heels of Sovos introducing the Sovos Compliance Cloud, many in our company’s leadership team have blogged about related topics and the critical […]

North America ShipCompliant
March 12, 2024
Florida HR 583 Set to Uncork Larger Format Wine Bottles

Florida wine lovers could soon enjoy a bigger selection of bottles based on a recent bill passed by the state’s legislature (HR 583) that would remove the existing cap on wine bottle sizes. What is Florida’s HR 583 bill? Currently, Florida law prohibits the sale of wine in bottles larger than one gallon (a little […]