What Causes Problems for Companies When it comes to VAT Compliance?
According to Aberdeen Group, a leading research organisation, staying up-to-date with the many and varied rate and rule changes is the single most challenging aspect of VAT compliance. Given the ever-changing nature of the VAT regulatory environment, it is easily possible to lose sight of new legislation and all regulatory changes concerning VAT throughout Europe and beyond.
Completing necessary returns in various countries on time often leaves little time available for the necessary research and implementation of regulatory changes within the various departments and systems needed to maintain compliance. Mistakes can therefore quickly result in non-compliance without being noticed immediately. Aberdeen research has shown that tax changes take an average of nearly 19 days to fully be implemented in an IT system, which creates opportunities for errors with tax logic that is continuously out-of-date. Updates can be missed if there is no dedication to research, and even if there is, the direct opportunity cost of dedicating resources to time consuming research and regulatory interpretation can be substantial, particularly when those doing the research have no substantial VAT compliance expertise.
This issue is compounded by organisations operating in multiple jurisdictions, that may have many individuals across the organisation doing compliance research for their various business units, providing little synergy for the organisation as a whole.
How Does a Modern VAT Automation Tool Help Solve these Complex Issues?
A modern VAT automation tool can help to address these common issues in a number of ways. First, modern VAT compliance technology should cause no interruption to the every day workflow through updates or lengthy IT implementations, but should be a truly automatic solution that implements changes, without delay, without the need for IT involvement or manual downloads. Using a hosted solution also allows users to work from various locations and therefore offers flexibility for larger organisations that rigid systems such as ERP’s in many cases do not allow. Many hosted systems also offer best in class data security, with safe locations in central Europe, such as Germany, which has one of the strictest data privacy laws.
Opting for a hosted solution also ensures that implementations can be managed without IT departments or with their minimal involvement, further decreasing implementation time and allowing organisations to efficiently implement “best in class” process changes that will get your VAT process on track.
When considering an automated VAT solution, a business should take into account what aspects of the process would benefit most from time savings, which in many cases tends to be the data gathering as well as the analysis stages of the process. Having your VAT process mapped with a specialist during implementation is therefore crucial and ensures that the product will work smoothly with your existing structure.
This also prepares your department for any changes that might occur in the future. The flexibility of this initial tax code set-up allows you to easily build and update requirements yourself going forward, cutting out the need to constantly use a costly specialist to update the tool every time you want to run a report or generate a specialised report for a specific country, company or other discrete set of data. This also ensures that tax updates that are most relevant to you will work with your current tax logic and do not need to be re-configured individually.
VATware: A Modern Solution to Designed to Stay Current With Regulatory Changes throughout Europe
Our VAT automation software, VATware, has been developed by VAT experts to solve the common challenges of inflexible and outdated VAT technology tools and combining it with current demands of the market. The tool is a truly innovative SaaS product that was first developed internally to help us cope with our growing VAT compliance engagements and has been shaped to our high demands to continuously cut time and costs.
However, over the last 10 years, VATware has grown into an enterprise class software that is valued by a growing number of Fortune 500 companies. We designed it to enable corporate tax departments to significantly improve their VAT compliance process. If you have any questions or would like to know more how VATware could help optimise your VAT process, please get in touch.
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