11th Edition of annual report offers guidance for multinational companies scrambling to adapt to government-sparked digital transformation
BOSTON, Dec. 10, 2019 — Global tax software leader Sovos today released its comprehensive report on global value-added tax (VAT) mandates and compliance. The report, “Trends in Continuous Global VAT Compliance,” provides the most complete guide to global VAT enforcement regulations and delivers strategic recommendations for businesses at a time when governments all over the world are enacting complex new policies to enforce VAT mandates.
As businesses seek to pursue digital transformation, governments are doing the same by using big data to create and enforce complex new policies aimed at narrowing the “VAT gap,” the difference between the tax revenue governments expect businesses to pay and what they actually collect. The other digital transformation — the one taking place in tax administrations worldwide — coincides with corporations launching massive IT projects, including migrating enterprise resource planning (ERP) systems to a more powerful new generation, such as SAP S/4HANA.
“Companies that fail to take global VAT compliance into account when developing and executing ERP strategies risk halting or even reversing their own digital transformations,” said Christiaan van der Valk, lead author of the report and vice president of strategy at Sovos. “Tax administrations all over the world, including in Europe and Asia, are following the successful lead of Latin American countries in developing VAT mandates that have proven effective in reducing the VAT gap but have created a new set of challenges for multinationals at a difficult time.”
Authored with contributions from a team of global tax compliance experts, the “Trends in Continuous Global VAT Compliance” report explains why government enforcement of VAT mandates is such a challenge for businesses right now, because:
- Governments worldwide are moving to continuous transaction controls (CTCs), including clearance-model electronic invoicing, in which a tax administration actually becomes a real-time third trading partner in business-to-business transactions;
- The accelerating trend toward CTCs is forcing multinational companies to re-evaluate how they deal with indirect tax compliance generally;
- As tax authority controls worldwide migrate to the real-time harvesting of data directly from sales and purchase transactions, businesses face a shift toward forced automation that is incompatible with traditional decentralized approaches to indirect tax compliance;
- Increasingly, tax administrations are creating their own ledgers of authenticated business transaction data that serve as the source of truth to determine companies’ tax liabilities, so businesses must pay more attention to their evidence archiving and data reconciliation capabilities; and
- The CTC trend coincides with major performance upgrades of ERP and increased implementation of cloud-based B2B transaction automation platforms. Businesses now have to meet the challenge of managing their own digital transformation, as well as that of tax administrations at the same time.
Aside from providing deep analysis of the challenges businesses face in an evolving VAT environment, the Sovos report offers specific recommendations for businesses facing the tasks of upgrading or migrating ERP and staying ahead of disruptive new trends in global VAT compliance at the same time. The report also provides the most comprehensive guide available to CTC compliance mandates in countries all over the world.
This is the 11th edition of the report and the first to expand its scope well beyond e-invoicing compliance to the full universe of continuous transaction controls, including e-archiving, and VAT determination and reporting. Download the report here.
Sovos is a leading global provider of software that safeguards businesses from the burden and risk of modern tax. As governments and businesses go digital, businesses face increased risks, costs and complexity. The Sovos Intelligent Compliance Cloud combines world-class regulatory analysis with its secure, scalable and reliable S1 cloud software platform to create a global solution for tax determination, e-invoicing compliance and tax reporting. Sovos supports more than 7,000 customers, including half of the Fortune 500, and integrates with a wide variety of business applications. Sovos has offices throughout North America, Latin America and Europe. Sovos is owned by London-based Hg. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.