Acquisition holds immediate benefit for customers with complex supply chains and footprints across Europe; furthers Sovos’ long-term global tax engine strategy
BOSTON – December 6, 2021 – Global tax software provider Sovos today announced it has acquired Germany-based TLI Consulting GmBH. The move significantly advances Sovos’ value-added tax (VAT) determination capabilities, with immediate benefits for businesses running SAP. VAT determination is one of three pillars of modern tax compliance, and often the first that multinational companies tackle before addressing digital reporting and complex continuous tax controls (CTCs), like e-invoicing. Sovos will leverage TLI Consulting’s software, consulting services and team to help customers Solve Tax for Good® with complete, continuous and connected solutions for every facet of the digital transformation of compliance.
Sovos is on a years’ long journey to build end-to-end offerings that help businesses infuse trust in every transaction. That journey has included the acquisition and development of global CTC, VAT reporting and SAF-T solutions, and a Sovos Connect Once API for a seamless customer experience across systems that need to comply with a wave of real-time and e-audit VAT mandates. TLI Consulting, Sovos’ ninth acquisition in the past 12 months, continues that journey with enhanced VAT determination for businesses with complex supply chains covering a broad jurisdictional landscape across Europe and beyond.
“Sovos has built the most complete suite of technology and services for frictionless compliance in digitizing economies, with advanced solutions for CTC, SAF-T, VAT reporting and other global requirements,” said Andy Hovancik, CEO, Sovos. “The acquisition of TLI Consulting continues that leadership with heightened capabilities for VAT determination, which is often the first piece of an increasingly complex puzzle companies must solve.”
TLI Consulting has served businesses whose transaction and tax determination needs are too complex or costly to configure and maintain via native SAP and in-house tax experts. The company’s software solution extends native SAP VAT determination functionality, and its consultants have the integration and implementation expertise to ensure that SAP ECC or SAP S/4 HANA enterprise resource planning systems can seamlessly determine the right VAT decisions and tax codes for any outbound or inbound transaction.
“Today’s announcement represents a key building block toward a Sovos tax determination portfolio that now helps customers meet modern indirect tax compliance challenges globally, including in Europe, the United States, Brazil and elsewhere,” said Steve Sprague, general manager, global value-added tax, Sovos. “Together, we’re creating the technology solutions that speed simpler tax determination for every transaction, in every jurisdiction, for every tax regime.”
Sovos’ acquisition of TLI Consulting has immediate potential for positive impact on customers in Germany and throughout Europe. In addition to the SAP software extensions upon which it has built its business, TLI Consulting’s expertise and experience will contribute to Sovos’ global tax engine strategy, which is to ensure any customer system can benefit from indirect tax determination, CTC and SAF-T support through a single integration.
“As we join Sovos, the TLI Consulting team gains the opportunity to help create the one-stop VAT solutions companies crave, while expanding our reach as part of a global technology leader. We look forward to this next phase and the positive impact it will have on our customers and future customers,” said Martin Grote, Sovos vice president of European VAT determination and former TLI Consulting director.
John Gledhill, vice president of corporate development for Sovos, said, “As a global organization with more than 2,300 employees, Sovos will scale TLI Consulting’s software and services business in support of the largest multinational companies with complex business transactions in Europe. With this acquisition, Sovos also establishes operations in Germany and now has employees in 14 countries.”
The terms of the deal were not disclosed. Sovos is owned by Hg, the London-based specialist private equity investor focused on software and service businesses, and TA Associates. EY served as financial advisor to Sovos, and Burness Paull and Luther provided legal counsel. Rödl & Partner advised TLI Consulting.
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit www.sovos.com/en-gb/ and follow us on LinkedIn and Twitter.
About TLI Consulting
TLI Consulting offers VAT determination software and associated consulting to support clients in entering VAT processes into their SAP (and other ERP) systems through developing and implementing customized, practical and compliant solutions for accounts receivable and accounts payable processes. Further, TLI Consulting offers SAP solutions for VAT ID validations and VAT reconciliations and analysis.
Sovos Partner Network drives digital transformation of tax compliance for customers while offering significant profit potential and borderless growth to partners
BOSTON – October 6, 2022 – Global tax software provider Sovos today announced the launch of its new Sovos Partner Network designed to guide partners in addressing the critical needs of their customers as they navigate the complexity of digital compliance and changing tax regulations around the world. With access to Sovos’ complete portfolio of compliance solutions, along with its unmatched regulatory and tax expertise, this new program enables partners to bolster their tax compliance offerings and expand their business opportunities.
“Government authorities have gone increasingly digital with the calculation, reporting and compliance of taxes and Sovos continues to invest heavily in tax technology solutions. Collaborating with Sovos allows KPMG to bring both its leading technology and tax and implementation experience to clients,” said Niren Saldanha, Partner, Tax, KPMG LLP.
The Sovos Partner Network was built to align to our partners’ business models, whether they resell, co-sell, implement or embed Sovos solutions. Competitive incentives and other business-related program benefits were designed to assist partners in expanding their businesses in ways that best fit their go-to-market strategies. The modern program includes a rich array of consistent and accessible tools, training and a self-service partner portal. Industry leaders such as Oracle, NetSuite, SAP and KPMG have already partnered with Sovos to increase customer support, in addition to hundreds of other partners across the globe, both large and small. Collectively, these partners share Sovos’ core mission to Solve Tax for Good®.
Sovos’ global commitment to partners extends to Latin America. “EY Brazil brings tax transformation and automation to its clients by leveraging process and tax automation software in the market, such as Sovos Taxrules,” says Giovanni Schiavone, Tax Transformation Partner at EY Brazil. “We conduct ‘Tax Transformation Projects’ that evaluate our clients’ GAPs and then suggest automations using the most advanced features of solutions like Sovos to help create a high-performance tax area, aligned with current and future Brazilian compliance needs.”
Why partner with Sovos?
The Sovos Partner Network offers many ways to create mutually beneficial opportunities, including:
Driving new revenue streams: Business partners can expand their product portfolio and market coverage by offering solutions that solve their customers’ needs for compliance.
Offering the most comprehensive suite of solutions and services: Leveraging Sovos’ Cloud, SaaS and API development, partners can offer robust solutions to customers such as SAGE, Sun Chemical and Nationwide that address real-world challenges.
Building upon 40 years of experience and research: Through our team of subject matter experts, Sovos supports tens of thousands of customers around the globe, including half of the Fortune 500, and is deployed in more than 70 countries.
Collaborating with trusted names in the industry: Partners can provide their customers with up-to-date tax compliance solutions amid global regulatory changes with one of the most trusted brands in the market.
Access to growth-focused tools and resources: Sovos offers a wide range of actionable benefits that are designed to drive success, including sales and marketing, business development, technical and enablement tools and other resources that help partners grow their business.
“Strong partner relationships are a key component of our strategic business approach. This new global program represents the next step in our ability to support the evolving needs of customers in today’s global tax and compliance marketplace,” said Jonathan Eisner, vice president, global alliances and chief channel officer, Sovos. “Investing in a stronger ecosystem that better supports and rewards our partners is a critical part in solving these dynamic challenges.”
To learn more about the Sovos Partner Network or apply to become a partner, click here.
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe and is owned by Hg and TA Associates. For more information visit www.sovos.com and follow us on LinkedIn and Twitter.
It’s a good year to be an IT leader. After far too many years of the phrase “do more with less” being the mantra of most organizations when it came to technology spending, things are finally looking up.
According to research firm Gartner, IT spending will reach an estimated $4.5 trillion in 2022. This represents a 5.1% increase over 2021 and is a much-needed boost for businesses in need of technology updates that may have been placed on the backburner due to the COVID-19 pandemic.
IT departments are also eager to switch focus from just keeping things afloat to more long-term projects that will strategically and successfully support the future of work. This assertion is backed by numbers provided by IT management solutions firm Flexera in its State of Tech Spend Report.
When asked where budgets were being allocated to this year, 54% of those surveyed expected increased investment and resources to be applied to technology that makes it easier and more seamless for employees to work from home. Another 42% of those surveyed stated a newfound willingness to move to the cloud to support the realities of a post-pandemic world. Participants in this survey were all executives and high-level managers in IT with significant knowledge of their organizations’ overall IT budgets, weighed in on what to expect in the year to come.
These findings show the level of importance businesses are putting on hybrid and flexible work environments. The likelihood that working from home, at least in some capacity, is here to stay has IT departments rethinking their strategies to be prepared to tackle any challenges that may arise.
Could the Government Stand in the Way?
The strategies being outlined by IT departments are sound and inline with the world in which we now exist. However, there is another post-pandemic force at work with the potential to derail the best laid plans and devour a vast amount of budget and resources. Government mandated e-invoicing.
If you work as an IT leader at a multinational company, you likely fall into one of the two following categories. One, you’ve been brought into deal with the new realities of real-time oversight and enforcement from regulatory authorities. Or two, you are about to be brought into the fray with your own internal mandate, solve this problem for good.
Why am I so definitive in this declaration? Because I work with some of the biggest brands on the planet and I am witnessing firsthand the impacts these mandates are having on their IT organization.
When it comes to IT projects, most are not reactionary but the result of careful and methodical planning over a long period of time. However, the government is changing the rules here. No longer are projects and upgrades on your timeline. When they implement new laws and mandates it’s either you move quickly to address the issue and make it right or you pay the consequences which can range from hefty fines to even losing your license to operate.
What Does This Mean for Me?
As government mandated e-invoicing laws quickly ramp up around the world, they represent a credible threat to your IT budgets. IT departments must be prepared for the new realities that accompany government mandated e-invoicing. With authorities now in the data stack of your businesses examining transactions in real-time as they traverse your network, you will need a solution that enables you to deliver the information in the format required in real-time.
Bottom line, compliance is no longer a tax issue. IT leaders and other senior leadership must work together to align business functions across the board. IT needs to ensure the resources and tools are in place to meet government mandated obligations, no matter the company’s industry or location.
A failure to address the problem early will only lead to more complex and costly problems down the road that will absorb critical budgets and resources earmarked for other priority projects.
It might not quite be THAT red phone that’s ringing, but rest assured, management is currently dealing with a serious problem, and they are looking at IT to solve it for them.
There are two things that make Boards and C-Suites nervous beyond all else. Risks that have the potential to impact the bottom line and company/brand reputation. This current issue can do both and fast if not dealt with timely.
I’m talking about government tax mandates.
Now you may ask, haven’t government mandates been around for decades? Why the urgency now? Yes, they have been around for a long time, but they have never existed in their current form or had the ability to impact your operations so quickly.
Allow me to explain. In the past, organizations around the world were required to report on transactions after the fact and pay the amounts they were legally obligated to pay. If they didn’t, the government might get around to auditing them a few months or years down the road and assess a penalty if things were found to be out of order. In the grand scheme of things, it was a minor inconvenience for businesses and not a real deterrent for having faulty processes or negligence.
That all began to change a few years back when governments began looking at a tax gap that was growing with no easy solutions to reign it in. Think I’m exaggerating? According to the 2021 report on the VAT Gap issues by the European Commission, in 2019 alone EU countries lost out on €134 billion in Value-Added Tax (VAT) revenues legally owed to them by businesses.
This was a wake-up call to every country that employs the VAT system of taxation anywhere in the world. Not only were they losing out on much needed revenues, but the problem was growing worse. Something needed to be done and done fast or they wouldn’t be able to fund vital programs in their countries.
Fast forward to today. Countries have taken a serious look at the problem and have decided that technology is the answer. They have invested heavily in digitization and have brought their capabilities not only up to par with business, but in many cases, probably for the first time in history, have surpassed the capabilities of private industry to monitor and report on financial transactions.
Today, there is no more reporting after the fact. Governments have set up shop right in your data stack and are reviewing transactions in real-time. And with real-time monitoring has come real-time enforcement. If you are not reporting the information the way the government has mandated, you can expect swift action ranging from expensive fines right up to the revocation of your business license in that country. Both would be devastating shots to your company’s financial outlook and reputation.
This is why there is so much urgency to get IT on board and have a strategy to address the issue on a global basis. Things are only going to get more complicated and the ability to scale systems to meet changing tax mandates in all places you do business has become a top priority for companies.
It’s a new world out there as far as VAT is concerned and this is a lot to come to terms with. If this is new information to you or you are in the process of coming to terms with how it impacts your organization, I’d encourage you to remember and share the following five things with your colleagues:
1. The government is in your data
Real time tax reporting is becoming the new norm for businesses worldwide. Governments are no longer satisfied with receiving data after the fact and are now requiring a permanent presence in your data stack.
2. Government data mandates are taking control away from companies
With government mandated e-invoicing taking the world by storm, businesses are left with little time to prepare for this shift. To remain operational and comply with these mandates, IT must create a strategy to ensure that they are meeting mandate obligations while keeping with the parameters of long-term plans and budgets.
3. Data mandates are moving and evolving quickly
As governments are rapidly moving towards mandated e-invoicing implementation, organizations are now faced with an extremely short window to update their tax codes and mandates. For IT departments, overseeing and executing these changes will become one of their top priorities.
4. Data mandates lack consistency from country to country
For international organizations staying up to date on new processes, technologies and regulations are all essential components to running a successful business. However, the different approaches being adopted by each individual regulatory authority are causing a lot of uncertainty for businesses. The challenge for IT is to create the infrastructure that allows the business to meet the individual mandates of each country’s regulatory authority, while also integrating with one another to provide a real time global dashboard of the organization’s compliance status.
5. Governments have increased the severity and speed of enforcement
Tax authorities are becoming more aggressive than ever to close tax gaps. With the use of digital tools and processes, governments can quickly expedite compliance and track tax fraud effectively. In today’s digital world, penalties can be swifter and more severe than in the past. IT needs to ensure that transaction data is presented to regulatory authorities in the format and time frame they demand.
I’m hopeful this information will give you some things to think about as you work through the changing realities of global tax mandates.
Part I of V – Steve Sprague, chief commercial officer, Sovos
Government-mandated e-invoicing laws are making their way across nearly every region of the globe, bringing more stringent mandates and expectations on businesses. Inserted into every aspect of your operation, governments are now an omni-present influence in your data stack reviewing every transaction in real time as it traverses your network. Real-time monitoring has also brought about real-time enforcement that can range in severity from significant fines to shutting your business down completely. All of this has created a new reality for IT leaders who need a strategy to deal with these global changes. We asked our chief strategy officer, Steve Sprague to offer his guidance on how this will affect IT departments and how they can best prepare.
Q: With government authorities now in companies’ data and demanding real or near real-time reporting, what impact will this have on IT departments?
Seve Sprague: CIOs need to make a choice – do they pivot with these changes and adopt a centralized approach to their data, systems, business processes and applications, or do they run a decentralized platform where every country is left to make their own decisions? More than 95% of companies have implemented a decentralized approach as these mandates have grown country by country. However, as Latin America has grown from only three countries instituting these mandates in 2014 to more than 14 countries implementing them now, and with another 30 countries around the globe beginning the process of implementing similar regimes, including economies across Asia and Europe, like France and Germany – a decentralized approach leads to several long-term problems, including:
• Limited visibility outside of the country
• Multiple tools and vendors across different countries
• Disjointed processes with a focus on fulfilling local obligations only
• Solving the “problem at hand” vs. looking at the bigger picture
• Poorly defined roles and responsibilities
• Inconsistent approach to implementing additional countries
Q: To meet government mandates and ensure operations continue uninterrupted, what should IT prioritize? What approach would you recommend?
Seve Sprague: IT should focus on the end goal: implementing a centralized approach to these government mandated e-invoicing laws to ensure a globally consistent approach to all digital filings. There will be cost reduction as the number of vendors and tools are consolidated, and risk will be further mitigated through increased standardization and visibility. I can’t overstate the importance of implementation synergies as requirements increase and expand. This is only going to get more complex as time goes on. The clarity of roles and responsibilities is the other benefit to IT teams, as this approach will lead to clearly defined areas of focus for the team. Finally, alignment of analytics through one data hub will now be possible, providing a centralized dashboard for your global operations.
A lot has changed in the world of government mandated e-invoicing. Continued investment in technology by government authorities has put regulators in the position to demand greater transparency along with more detailed and real-time reporting. To meet these demands, companies are looking to their IT organizations. The good news is you don’t need to go it alone. Sovos has the expertise to guide you through this global evolution based on our experience working with many of the world’s leading brands.
Need help keeping up with global mandates? Get in touch with Sovos’ team of tax experts.
As chief financial officer, Kevin leads all finance and accounting related disciplines for Sovos. In this role, he oversees the global practice leads for critical business functions including tax, treasury, corporate development, accounting operations and financial planning and analysis.
Kevin’s business philosophy is to hire the best people, give them a clear set of strategic priorities and then give them the room and support needed to execute on their objectives. He is a veteran of the technology industry having held senior financial positions at Sparta Systems, Honeywell and General Electric.
Kevin’s career to date has presented him with multiple opportunities to live and work abroad, including stops in France and Japan. He credits these experiences for making him a more well-rounded leader who understands the role culture plays in successfully operating a global business.
When not in the office you are most likely to find Kevin exploring the Atlanta area with his wife and two children.
As chief marketing officer, Leah is charged with setting the global marketing strategy for the organization, enabling collaboration and establishing best practices worldwide. Her role is to influence and improve all aspects of the customer journey to drive increased demand for Sovos’ solutions and services.
Leah’s leadership style and business philosophy are rooted in the power of working cooperatively toward a common goal. She believes that when teams are informed and empowered, they will produce their best work. Challenging individuals to achieve excellence while supporting them with the tools necessary to thrive in any environment is a core tenant of her managerial approach.
A career spent leading global marketing teams across different disciplines of fintech have prepared her well to lead in an industry where continuous change is the only constant. She has a passion for helping small businesses succeed through the use of technology, a skill she adopted at a young age working in her parent’s retail business.
When not in the office, it’s likely you will find Leah spending time with her family and friends at the lake, traveling on her next adventure or taking in the latest performance at the theatre.
As vice president of Financial Planning & Analysis, Maylin leads our corporate finance function to support Sovos leadership and regional and functional teams in driving growth.
Maylin is passionate about process improvement and leading high-performing finance teams bringing extensive experience in financial reporting, merger and acquisition integration, financial system implementation, and investor relations support to Sovos. Her career spans working at three Fortune 500 companies and most recently at two high-growth private equity-backed companies.
Based in Atlanta, Maylin enjoys spending time at home and traveling with her husband and two teenage daughters.
As vice president and global practice leader for client support, Angelique Stewart is charged with creating and maintaining a world class support experience for Sovos’ customers. With a personal and professional philosophy rooted in the belief that you should never settle for less; Angelique consistently challenges herself and her team to find ways to improve.
Angelique is a champion for her team and works to ensure they are growing professionally and realizing their full potential. She believes that a successful team can only be sustained when you help your people meet their personal objectives while also working to achieve organizational goals.
A first-generation college graduate, her grandparents emigrated to the US from Barbados, she appreciated the drive and strong work ethic instilled in her by her family. This is something that she brings to the office every day and something that she and her husband Marlon, who originally hails from Jamaica, work to impress upon their daughter Amaya.
When not in the office, Angelique is typically attending soccer games with her family and Yorkie Jaxon, cooking or enjoying her favorite music. Travel is a passion of hers and she is always looking for her next adventure.
As chief channel officer, Jonathan leads partner strategy, programs, and sales. In his role he works across the regions, product teams, and functional areas to ensure close alignment on best practices and go-to-market execution.
Jonathan’s philosophy is centered on scalability and mutual success. Insight he gained during his 20+ years building global sales and partner organizations at leading, fast-growth technology companies including VMware, Red Hat, and Deltek.
Jonathan has extensive experience managing high-performance teams. He credits his success to providing people the freedom to execute within an entrepreneurial culture that is tied to a clear mission.
Outside of work, Jonathan enjoys spending time with family, travel, and is an avid baseball and football fan. He has a Bachelor of Science in Marketing from The University of Colorado and an MBA from The Johns Hopkins University.
As vice president of professional services, Dan is charged with establishing a strong customer centric organization built upon a well-balanced team and a shared vision of success.
Dan’s business philosophy is to bring together career-minded people who take pride in what they do. He believes that legendary basketball coach Pat Summitt sums it up best, “Responsibility equals accountability equals ownership. And a sense of ownership is the most powerful weapon a team or organization can have.”
He has spent more than 15 years building repeatable implementation processes and driving predictable results in the fintech space. A result oriented professional, Dan takes pride in taking ownership of a given assignment and finding ways to execute on his own.
Outside of the office, you are likely to find Dan spending time with his family at the ice rink where he coaches his three boys. When able to escape the rink, he and his wife enjoy trying new restaurants and New England craft breweries.
Dan holds a Bachelor of Science degree from Syracuse University and Master of Business Administration from Bentley University.
Many tax authorities are increasing their focus on the insurance industry in an effort to close tax revenue gaps, with many introducing Insurance Premium Tax (IPT) and other indirect taxes for insurance. Globally, IPT is fragmented across over 200+ countries and achieving compliance can be a complex process requiring specialist knowledge.
Insurers, especially those operating across multiple territories, can find keeping up to date with the latest IPT rates, rules and regulations to ensure compliance challenging.
This guide provides a helpful snapshot of the indirect tax rules that apply to insurance premiums across the world, including:
The guide provides a useful reference of indirect rules across Europe including:
Albania, Andorra, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaca, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Switzerland, United Kingdom
And across Asia including:
Armenia, Azerbaijan, Bahrain, Bangladesh, Brunei Darussalam, Cambodia, Hong Kong, India, Indonesia, Israel, Japan, Kazakhstan, Korea (the Republic of) (South), Lao People’s Democratic Republic, Macau, Malaysia, Maldives, Mongolia, Myanmar, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Sri Lanka, Taiwan (Province of China), Thailand, Turkey, United Arab Emirates, Vietnam
Across Africa including:
Angola, Benin, Botswana, Burkina Faso, Congo, Egypt, Eritrea, Gambia, Ghana, Kenya, Libya, Mauritius, Mozambique, Namibia, Nigeria, Saint Helena, United Republic of Tanzania, Zambia, Zimbabwe
For Australia and New Zealand including:
American Samoa, Australia, Fiji, French Polynesia, Marshall Islands, New Caledonia, New Zealand, Wallis et Futuna
Across North America including:
Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Canada, Cayman Islands, Costa Rica, Curacao, Dominican Republic, El Salvador, Greenland, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Puerto Rico, Saint Kitts and Nevis, Saint Lucia, Saint Martin (French part), Saint Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, United States of America, Virgin Islands
And, finally, the indirect tax rules for insurance across South America including:
The digitization of tax is a trend that will undoubtedly continue. Organisations need to prepare for any changes to reporting as this will impact compliance obligations for the countries they operate in.
Tax authorities have increased their focus on the insurance industry to ensure IPT and parafiscal taxes are collected correctly, accurately, and on time.
Operating in multiple countries inevitably means also having to comply with many local regulations in line with IPT statutory and parafiscal filing. Compliance regimes can be simple or complex, but the difficulty is that they’re varied.
Welcome to the 13th edition of Sovos’ annual Trends report where we put a spotlight on current and near-term legal requirements across regions and VAT compliance domains.
This report provides a comprehensive look at the regulatory landscape as governments across the globe are enacting complex new policies to enforce VAT mandates. It examines the demanding and unprecedented insight now required into your economic data so that regulatory authorities enforce standards and close revenue gaps.
This year’s report examines the evolution of law and practice around the four emerging megatrends that Sovos experts identified in the 12th edition. These trends, many of which revolve around tax compliance and controls being ‘always on’, have the potential to drive change in the way organizations approach regulatory reporting and manage compliance.
Authored by a team of international tax compliance experts, we provide extensive recommendations on how companies can prepare for and thrive through these changes.
Get the report
The four mega-trends that we examine are:
Continuous Transaction Controls (CTCs) – Countries with existing CTC regimes are seeing improvements in revenue collection and economic transparency. Now, other countries in Europe, Asia and Africa are moving away from post-audit regulation to adoption of these CTC-inspired approaches. The report highlights how countries like France and Hungary have accelerated their transition to CTCs, and how many jurisdictions are combining invoice controls with CTC transport documents, thereby expanding their real-time reach from financial to physical supply chains.
A shift toward destination taxability for certain cross-border transactions – Cross-border services have historically often escaped VAT collection in the country of the consumer. Due to a large increase of cross-border trade in low-value goods and digital services over the past decade, administrations are taking significant measures to tax such supplies in the country of consumption or destination.
Aggregator liability – With the increase of tax reporting or e-invoicing obligations across different taxpayer categories, tax administrations are increasingly looking for ways to concentrate tax reporting liability in platforms that naturally aggregate large numbers of transactions already. Ecommerce marketplaces and business transaction management cloud vendors will increasingly be on the hook for sending data from companies on their networks to the government, potentially even inheriting liability for paying their taxes. The report notes how the July 2021 introduction of sweeping changes in e-commerce VAT legislation via OSS and IOSS are confirming this trend.
E-accounting and e-assessment – Combining CTCs with obligations to synchronize entire accounting ledgers makes onsite audit necessary only in cases showing major anomalies across these rich data sources. Over time, the objective is for VAT returns and other tax reports to be prefilled by the tax administration based on taxpayers’ own, strongly authenticated source system data. A brief deep-dive into the origins and potential future of SAF‑T shows how this trend is evolving to become a solid companion to CTCs globally.
CTCs have emerged as the primary concern for multinational companies looking to ensure compliance despite growing diversity in VAT enforcement approaches. Tax authorities are steadfast in their commitment to closing the VAT gap and will use all tools at their disposal to collect revenue owed. This holds especially true in the aftermath of COVID-19, when governments are expected to face unprecedented budget shortfalls.
The potential costs and risks associated with the trends highlighted in the report cannot be effectively mitigated with a reactive or opportunistic approach. The digital transformation of tax administration can – if approached as just an evolution of the legacy ‘post audit’ VAT world – significantly contract the digital transformation of businesses. This report suggests an analysis framework that companies can use to ensure ongoing VAT compliance whilst maximizing the opportunities of modern information and communication technologies for their own benefit.
In addition, Trends includes a major review of the country and regional requirement profiles. These profiles provide a snapshot of current and near-term planned legal requirements across the different VAT compliance domains.
As chief technology officer (CTO), Eric sets and oversees technology strategy for Sovos. With more than 25 years’ experience leading technology teams, he is a strong proponent for establishing a corporate vision and then providing his teams with the room to work, ensuring they have the freedom to tap into their full potential.
Eric has a wealth of experience leading teams throughout his career that focused on critical, high-volume transactions. Most recently, Eric was the CTO for Fiserv’s core payment acceptance business unit where he led a global organization supporting the world’s largest payment card processing volumes.
Eric’s leadership style was honed during the six years he spent in the Army National Guard as a combat engineer and squad leader. Here he learned the importance of professionalism, accountability and that the mission always comes first.
A self-described passionate and outgoing person, Eric enjoys hiking Kennesaw Mountain National Park and the many trails around Metro Atlanta with his family and dog. When not in his home office, you are likely to find him on his ERG rowing machine, or potentially brewing bourbon barrel porter beers or pitching yeast for wine or mead making.
As managing director for the Americas region, Alvaro leads multiple Sovos initiatives, including integrating acquired companies and technologies into our strategic solutions and product offerings. Alvaro believes that adopting a client first approach helps to better understand customer needs and focus on solving specific problems across regions.
Alvaro joined Sovos from its acquisition of Acepta, where he served as CEO. During his tenure, he guided the company to a leadership position in the issuance of electronic invoices, e-documents and digital identity in Chile. Now with Sovos, he sets the strategy to bring these services to all of the SSA region.
Creating a culture with a singular focus on solving customer problems is something Alvaro is passionate about. He views his role as bringing together a talented group of people, tapping their full potential and providing them with the tool necessary to be successful. The opportunity to build a new team inside Sovos has inspired him to begin a new journey of problem solving.
When not in the office, you’ll find Alvaro playing golf, tennis or running. He also keeps busy by teaching tennis to his three kids.
As vice president of Product Management for VAT Americas, Oscar Caicedo sets market and product direction across continuous transaction controls, reporting and tax determination. In this role, he leads groups of dedicated subject matter experts across the Americas region.
Oscar brings more than a decade of experience leading consulting and implementation teams focusing on data integration and regulatory requirements. He is an industry recognized expert in digital transformation and electronic tax solutions. Prior to Sovos, Oscar spent more than four years at Invoiceware, which was acquired by Sovos in 2016.
Oscar has managed complex implementation projects for many of the world’s most recognizable brands. He holds a Bachelor of Business Administration degree in business economics from Georgia State University.
This will address the tax challenges of an increasingly digital worldwide economy. As of 9 July 2021, 132 of the 139 OECD/G20 member jurisdictions have agreed to the Inclusive Framework on BEPS.
Pillar 1 gives a new taxing right, Amount A, to market countries to ensure companies pay tax on a portion of residual profits earned from activities in those jurisdictions, regardless of physical presence. Pillar 1 will apply to multinational enterprises (“MNEs”) with global turnover above 20 billion euros and profitability above 10%.
There will be a new nexus rule permitting allocation of Amount A to a market jurisdiction when the in-scope multinational enterprise derives at least 1 million euros in revenue from that jurisdiction. For jurisdictions with a GDP less than 40 billion euros, the nexus will instead be set at 250,000 euros.
The “special purpose nexus rule” determines if a jurisdiction qualifies for the Amount A allocation. Furthermore, countries have agreed on an allocation of 20-30% of in-scope MNE residual profits to market jurisdictions, with nexus using a revenue-based allocation key.
Revenue will be sourced to the end market jurisdictions where goods or services are consumed, with detailed source rules still to come.
More details on segmentation are still in the works, as is the final design of a marketing and distribution profits safe harbour that will cap the residual profits allowed to the market jurisdiction through Amount A.
Lastly, countries have agreed to streamline and simplify Amount B with a particular focus on the needs of low-capacity countries. The finalised details are expected to be completed by the end of 2022.
Pillar 2 consists of Global anti-Base Erosion (“GloBE”) Rules that will ensure MNEs that meet the 750 million euros threshold pay a minimum tax rate of at least 15%. The GloBE Rules consist of an Income Inclusion Rule and an Undertaxed Payment Rule, the latter of which still needs to be finalised.
Pillar 2 also includes a Subject to tax rule, which is a treaty-based rule, allowing source jurisdictions to impose limited source taxation on certain related party payments subject to tax below a minimum rate. The rate will range from 7.5 to 9 percent.
When Will the Plan be Implemented?
There is currently a commitment to continue discussion, in order to finalise the design elements of the plan within the agreed framework by October 2021. Inclusive Framework members will agree and release an implementation plan.
The current timeline is that the multilateral instrument through which Amount A is implemented will be developed and opened for signature in 2022, with Amount A coming into effect in 2021. Similarly, Pillar Two should be brought into law in 2022, to be effective in 2023.
More Details to Come
Although the key components of the Two-Pillar Solution have been agreed upon, a detailed implementation plan that includes resolving remaining issues is still to come.
As many countries could be implementing these changes in the near future, it is important for businesses active in the digital economy to carefully track and understand the developments surrounding the OECD/G20 Base Erosion and Profit Shifting Project.
As vice president of diversity, equity and inclusion, Nina Fleming leads the development and execution of Sovos’ strategy for a more diverse and equitable workplace. Her business philosophy is rooted in the belief that inclusion is not a nice to have, but rather a business imperative that leads directly to a healthy culture, strong performance and an improved bottom line.
Throughout her career, Nina has helped companies understand that the differences between people make up the strength of an organization. She believes that when employees are free to bring their whole selves to work, the business benefits through greater productivity and innovation.
When not in the office, Nina enjoys traveling and spending time with family and friends. Always up for a great comedy, her favorite recovery mechanism is laughter.
If Nina could offer one piece of advice to any business it would be the words she carries with her every day: to whom much is given, much is required.