Evaluating AEOI Solutions: Top Questions to Consider

Scott Freedman
September 14, 2016

This blog was last updated on June 26, 2021

For financial institutions looking to proactively comply with global reporting standards including Foreign Account Tax Compliance Act (FATCA), Crown Dependencies and Overseas Territories (CDOT) legislation and the Common Reporting Standard (CRS) while minimizing costs and risks, our recent report showed that an Automatic Exchange of Information (AEOI) solution is key. In evaluating such solutions for your company, it is critical to ensure that your options best meet the needs of both the C-suite and your IT teams to avoid frustrations with onboarding and overall management, and ensure seamless compliance.

Top Questions to Ask in Evaluating an AEOI Solution

In the recent benchmarking survey by the Aberdeen Group, we sought to uncover the top challenges financial institutions face with global tax compliance initiatives. In our report, several challenges were cited, such as cost and deadlines, in regards to the new global standards. However, the report also revealed that employing an AEOI strategy creates added efficiencies, enabling these global organizations to centralize necessary processes and address challenges head on. In fact, those with AEOI solutions are 93% more likely to be able to generate all regulatory transmittals from one location! The top five questions you should ask as you evaluate potential AEOI solutions.

  1. Does it keep up with critical deadlines? A key component in mitigating the risk of non-compliance is submitting required documents on time. For financial institutions with a global presence, it can be a challenge to keep up with updates and new deadlines for each jurisdiction, and taking on this responsibility internally heightens the risk of missing a new deadline. An effective AEOI solution should track these deadlines and proactively alert you to changes. You’re not only buying an automated solution, you are also investing in AEOI compliance expertise and thought leadership.
  2. Is it flexible? Any centralized solution should offer transparency for multiple departments, with the ability to access important data in real-time for mapping and reporting. This is especially valuable to global financial institutions with employees doing business from locations around the world. An AEOI solution that is flexible to scale as needed will safeguard any issues with data storage and access to critical compliance details.
  3. Are customizations available to fit specific workflows? Within any organization, certain workflows, and internal deadlines are what helps drive successful performance. Since AEOI solutions provide automation capabilities to help boost accuracy and internal efficiencies, ensure your solution can also customize deadlines and alerts that follow your company’s specific workflow and processes.
  4. How complicated is the onboarding process? For financial institutions responsible for global compliance, onboarding a centralized solution can be a daunting task for both IT and accounting teams. Inefficient implementation can be extremely time-consuming and result in greater costs as a result of unnecessary downtime. Avoid the headaches with an AEOI solution that can be easily integrated into your existing systems, has a support team to help ease the setup process, and a modern easy-to-use interface.
  5. Does it automate manual processes? AEOI solutions outperform non-AEOI solutions with automated generation of filings 54% to 36%, according to our survey. Facilitating workflows with automation not only eliminates the need to hire additional staff but also improves accuracy and preserves internal resources. AEOI solutions that offer automation also help companies stay up to date by automatically updating workflows based on the latest regulations. There are also frequently hidden resource costs that an automated solution eliminates: financial institutions with tactical solutions often have dedicated teams and also part-time employees who work on reporting. These “part-time” efforts are hard to get a handle on in terms of total cost when managing global reporting in-house.

Take Action

View our AEOI benchmarking report resources to learn more, or register to attend our AEOI networking event on Sept. 22 in New York City.

Sign up for Email Updates

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

Author

Scott Freedman

Scott Freedman is Director of Product Strategy for AEOI solutions at Sovos. Scott has over 15 years of experience in strategic marketing and product strategy. He has worked for business-to-business software and SaaS solution companies like Thomson Reuters and with Fortune 500 companies as a business consultant. Scott has a background in law and earned his J.D. and undergraduate degrees from the University of Chicago and University of Illinois.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

2025 bond project
North America Tax Information Reporting
November 4, 2024
The Insurer’s Guide to the 2025 Bond Project

This blog was last updated on November 4, 2024 The regulatory landscape for insurance companies is undergoing significant changes with the Principles-Based Bond Project which is set to take effect on January 1, 2025. These changes, driven by the National Association of Insurance Commissioners (NAIC), will impact how insurance companies classify and value bond investments, […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]