The future of VAT compliance is digital. Not just in the sense that technology makes VAT compliance easier and more efficient. The future of VAT compliance is digital because tax authorities around the world are increasingly imposing mandatory digital compliance processes.
Unless you were planning to commit tax fraud, the turn to digital compliance is good news for everyone. From the tax authorities’ perspective, digital VAT compliance helps reduce the possibility of tax evasion and enhances revenue collection. For businesses, digital VAT compliance is faster, more efficient and secure, and less prone to error.
At the same time, tax offices are exacting about how digital VAT compliance needs to be conducted. Forms need to be submitted in the correct electronic format. And you will often need systems in place to communicate with the local tax authority’s API.
Companies will therefore need to ensure they have the software in place to ensure they can remain compliant.
Technology hasn’t just altered the way companies submit VAT returns.
Governments around the world – from India to Italy, Egypt to Poland – are gradually phasing in mandatory e-invoicing and e-books systems. The digital invoice and reporting requirements help prevent VAT fraud and give tax authorities precise real time data about participating companies’ books.
End of the return?
The inexorable implementation of e-books raises an interesting question. Will VAT returns become redundant? After all, if tax authorities already have precise real time transaction data, are returns still necessary?
It’s an intriguing possibility, and a reminder that just because we’re used to one way of doing things, our systems and processes won’t be overturned or disrupted by technology and news economic realities.
Resilience requires flexibility
How do you prepare for the future of VAT compliance? Firstly, it helps to have the latest digital VAT compliance tools.
However, it’s important to recognise that adapting to the future is not about any one set system or protocol. Rather, you need flexible, scalable technology that adapts to the evolving reality of VAT compliance
Vatglobal’s cloud-based VAT compliance toolkit is flexible and always up-to-date. It’s a scalable solution that gives you the resources to adapt as regulations change.
Finally, you could leave it to the experts. Vatglobal’s Managed Compliance solution is the easiest way to ensure your business is always completely VAT compliant, whatever the future brings.