INFOBRIEF

Taming the Value-Added Tax Beast with Technology

Value added tax (VAT) continues to increase in complexity as governments explore new methods for increasing revenues and closing tax gaps. In our newest IDC sponsored InfoBrief, “Taming the Value-Added Tax Beast with Technology” we explore the driving forces behind the VAT evolution and why it has led to increased complexity for organizations conducting business internationally.

The global VAT evolution is the result of many countries scrapping their local tax infrastructure and implementing a common global value-added tax (VAT) structure or significantly changing their VAT system. This shift adds a significant amount of change (for countries that switched to VAT) and uncertainty (for countries that are yet to switch) into corporate tax processes, especially for companies with interests in these new VAT countries.

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Why companies need to think globally when it comes to VAT.

VAT complexity is primarily a result of how widespread VAT is and the lack of uniform approaches among member countries. Situations that add to the complexity include:

  • VAT returns can differ greatly from country to country.
  • Different countries means translation issues abound.
  • Different industries can have different requirements.
  • The list of eligible transactions/ services is growing rapidly.

We have reached a point in the evolution of VAT compliance where localized point solutions can no longer keep pace with the demands of governments looking to close tax gaps and increase revenues.  Attempting to manage the complexity of modern VAT through disparate IT systems creates support and maintenance challenges that are essentially unsolvable.

With the tax gap continuing to increase globally, regulatory authorities have embraced the digitization of tax to increase revenue by eliminating suspicious supply chain activity and VAT fraud. This has provided a greater degree of control in implementing necessary reforms and changes.

Digitization has also lessened the burden on compliance by reducing paper trails through the automation of systems. Perhaps most importantly, it has allowed for the sharing of data between countries for cross-border transactions which has been plagued by inefficiencies and fraud.

This IDC InfoBrief provides in-depth analysis of why businesses need to consolidate and standardize platforms and IT processes to effectively implement compliance processes to create greater agility to capitalize on emerging markets. By having a single source of truth for data and reporting, organizations can better protect themselves against audits, fines and penalties.

Get your complimentary copy of the IDC InfoBrief now to ensure your organization is prepared to respond to the growing complexities of global VAT.