Tax & IT: How a Unified Compliance Vision Streamlines Digital Transformation

Sovos
February 17, 2020

What’s your digital transformation strategy? Whether you’re in IT, finance, tax or the executive suite, if that strategy doesn’t include tax, you may be overlooking a huge source of risk – and strategic benefit. It’s time to consider launching a conversation about tax in a digitally transforming world. Which is why we’ve created the “Yes, Tax” conversation guide to help tax and IT navigate this journey together. 


If you work in the finance or tax departments, you’re probably aware that the stakes for your IT colleagues couldn’t be higher when it comes to digital transformation. The roadmap for transformation can extend to five years or longer, with hundreds of applications affected. IT professionals engulfed in shifting timelines and budgets can be forgiven for not being fully updated on every element of global tax compliance that may be on your mind.

So, where is the common ground to build a unified vision for tax – and why do you need one? In the past few years, tax authorities have launched their own digital transformation. More governments are inserting themselves into every transaction a business makes and changing the requirements whenever they see the potential for more revenue.

The problem for many companies is that the disparate applications and ERP implementations that comprise their finance capability cannot keep up with trends in continuous tax compliance regulations. In the midst of this chaotic and heterogeneous data environment is precisely where finance, tax and IT can work together to define a unified vision based on moving tax compliance to the cloud, and doing so as a prerequisite to finance modernization (such as SAP Central Finance), not as an afterthought.

Here are some conversation starters you can use to launch a discussion with finance or IT colleagues around this important issue.

Q.   Is centralizing finances enough to move us forward?
A.   It’s critical, but it won’t be successful unless we centralize tax compliance, as well.

Detail: Constantly changing tax rules and deadlines on sales taxes, gross receipts taxes, excise taxes, value-added tax (VAT), shipping taxes and taxes on profits mean that it’s nearly impossible to maintain an accurate, up-to-date picture of compliance requirements in one country, much less the dozens of countries in which multinational companies may operate. Global companies could be working in many unique jurisdictions with a variety of laws and requirements. Tax determination processes, then, need to move from largely being after-the-fact validation tools to critical instruments to catch and correct errors as they are processed in transactional software. And that’s something finance can’t do without IT’s help, especially as new capabilities such as process automation are called for.

Q.   What are the consequences of non-centralized tax compliance?
A.    Every day they get more significant, and they’re different for every country.

Detail: Failure to proactively comply with tax mandates in a real-time digital environment leads to far more than a few fines. You could face costly audits, financial penalties, supply chain disruptions, decreased cash flow and damaged relationships with suppliers and customers. Under Mexico’s e-invoicing mandate, for example, non-compliance can effectively shut your business down and pull resources away from other projects as you scramble for quick-fix solutions to get up and running again.

Q.    What are the benefits of a cloud-based tax compliance solution?
A.     In two words, automation and control. Specifically, accurate automation of compliance and regulatory updates, so you don’t have to track them manually.

Detail:  You’ll also avoid the surprise of custom code running in a regional office that becomes an unforeseen speed bump to an ERP cloud migration or other critical IT project. Realize savings in maintenance, infrastructure and personnel, while your partner manages the tax compliance software in the cloud and your company doesn’t need to manually intervene every time regulations change. As an added bonus to IT, since you run from a single source of regulatory truth, tax teams can find data easily without burdening IT with help tickets.

Take Action

Get more information on the benefits of including tax in your digital transformation in the next blog post of the Sovos “Yes, Tax” series.

If you’re looking to have an informed conversation about modern digital tax, it pays to know what the experts think. Check out these resources from Sovos and share them with your colleagues:

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 leading global provider of software that safeguards businesses from the burden and risk of modern transactional taxes. As VAT and sales and use tax go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud is the first complete solution for modern tax, giving businesses a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. The company has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.
Share This Post

Latin America VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

E-Invoicing Compliance Turkey
January 21, 2021
Audio Blog: Turkey: Which documents can replace e-delivery notes?

  Join Selin Adler Ring, Regulatory Counsel at Sovos, as she discusses how the Turkey E-delivery note and its impact on your multinational organization. Listen to her discuss the following questions:  What is the new e-delivery note system in Turkey? Can e-invoices be used to replace e-delivery notes as paper invoices can still replace paper […]

Asia Pacific E-Invoicing Compliance EMEA VAT & Fiscal Reporting
January 20, 2021
China Expands B2B E-invoicing Pilot

From 21 January 2021, the e-invoicing pilot program in China will be expanded In December, China’s State Taxation Administration (STA) announced the expansion of the pilot program that enables certain taxpayers operating in China to voluntarily issue VAT special electronic invoices. These e-invoices can be used to claim input VAT so are generally used for […]

North America Sales & Use Tax
January 20, 2021
Key Points in the South Carolina Economic Nexus

The South Dakota v. Wayfair, Inc. decision pushed changes in many state economic nexus laws, including in South Carolina. The state enacted regulation similar to what was laid out in South Dakota, but there are a few key differences. We have outlined those important changes in the following blog post. Enforcement date: November 1, 2018. […]

EMEA IPT
January 20, 2021
Navigating Insurance’s Digital Highway Copy

From underwriting to reporting, the insurance industry is having to adjust and by choice or imposed, is embracing the digital evolution of its practices. On the reporting front, more tax authorities are forcing insurance companies to tailor their internal processes by jurisdiction, directly impacting the collection of information at the underwriting stage. Digitized services continue […]

Tax Information Reporting
January 20, 2021
Better Late Than Never: IRS Releases 1099 Reporting Guidance Impacting 2020 Season

January is in full-swing as businesses and software filers scramble to prepare Forms W-2, 1099, 1098 and other information returns to issue to recipients by the end of this month. As the deadline approaches for what is arguably the busiest month of tax season, the IRS released Notice 2021-06 impacting 1099’s that your company may […]