The Government Is Now Your Partner: Here’s How to Prepare

Today, more governments worldwide require real-time or near-real-time tax reporting from organizations to enforce tax policies and close massive tax gaps.

April 27, 2022

The Government Is Now Your Partner: Here’s How to Prepare

The entity synonymous with being antiquated and slow is now more digitally sophisticated than many companies in the private sector. Around the globe, governments – yes, the agencies married to paper-based processes – are issuing mandates at a heightened pace that give them access to data in real-time for monitoring and enforcement. Amit Venugopal, CIO at Sovos, shares how we can prepare ourselves for this shift.

The COVID-19 pandemic accelerated this digital transformation as governments sought real-time information via data signatures related to disease control, crowd management and travel.

This move shouldn’t come as a surprise. Any multinational company that has done business in Latin America over the last decade is familiar with real-time tax administration controls on business transactions. But it hasn’t stopped there. Governments in Europe and Asia followed suit, ushering in more transparency between the private and public sectors – and introducing a new partner into IT departments that team members must learn to work with.

The Government Is Now in Your Data Stacks

Today, more governments worldwide require real-time or near-real-time tax reporting from organizations to enforce tax policies and close massive tax gaps. As a result, tax administrators now have insight into every business-to-business transaction, from accounts payable and receivable to procure-to-pay to supply chain logistics and everything in between. This move is particularly challenging for IT teams because these mandates are not global in scope. Therefore, the regulations in Mexico differ from the U.K., which vary from Spain, and so on.

Additionally, small nuances in policies like thresholds for the businesses impacted can change in any year with little advance notice, exacerbating the challenges of keeping up with this complex legislation. Yet, the risks associated with non-compliance can range anywhere from a fine to a complete stoppage of business operations, making it essential for businesses to respond quickly to evolving requirements. IT is under more pressure to keep businesses running, given the high stakes.

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The Impact of Government Mandates on Multinationals

Giving governments real-time or near real-time access to transaction data adds to a real puzzle for multinationals. For many companies, the temptation is to deal with such mandates country-by-country, deploying a local team or perhaps finding a local solution provider to comply and keep up with constant changes in a particular jurisdiction. While local expertise is essential, that approach tends to be a bad idea, and the potential problems go far beyond just staying in compliance.

Building, monitoring, and maintaining multiple local systems is cost-prohibitive and extremely difficult to manage. Constant and unpredictable changes in mandates make budgeting for change virtually impossible. Costs can quickly spiral. These mandates also affect other critical functions of an organization: procurement, supply chain management and intra-group invoicing, to name a few. When a company can’t bill a client or receive a critical shipment because it isn’t in line with government requirements, it strikes directly at the heart of the business. Cash flow slows, and relationships with customers and suppliers suffer. These constant compliance issues and disruptions can derail technological innovation and digital transformation.

IT Centralization Is Key

Centralization is the most effective method of handling the explosion of government mandates worldwide. Using a solution or developing a system that tracks regulatory changes in different countries and automatically implements them is more efficient and cost-effective than tackling compliance bit-by-bit. In addition, centralization and automated response to mandate changes deliver predictability and make IT budgeting and planning possible, bringing costs in line even in an atmosphere of constant change.

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Given the critical nature of compliance in keeping a business up and running, a single view into government compliance is essential in any digital transformation. And with compliance under control, IT departments can free up both money and employees to drive innovative, business-critical change.

Companies must respond to government mandates to keep their businesses running smoothly worldwide and achieve growth and innovation. And it all starts within IT.

How are you managing government mandates on real-time data? Share with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to know what you feel!

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Amit Venugopal
As chief information officer, Amit Venugopal oversees Sovos’ technology solutions across lines of business. Since joining Sovos, Amit has built our global cloud operation from regional teams to a singular organization. He has redefined the standards for Sovos’ SaaS hosting delivery model, changing team structures to align around self-service delivery and continuous improvement.
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