Navigating an evolving tax compliance landscape
The COVID-19 pandemic put unexpected pressure on the global economy. As a result, governments introduced temporary tax measures to respond to the immediate needs of businesses.
However, with the vaccine offering some much-needed respite from the pandemic, the sun is setting on these fleeting fiscal requirements. Now, businesses need to wrap their heads around new rules and regulations to avoid penalties and remain compliant.
Continue reading to learn more about the current tax compliance landscape to keep your business ticking along smoothly — with no nasty tax surprises.
A challenging compliance landscape
Governments around the globe are committed to reducing their respective VAT gaps, putting an end to the ‘hidden economies’ that are hindering societal progress. In 2020, the VAT gap stood at an estimated €164 billion in the EU alone.
This uncollected tax leaves countries with less funds for critical aspects of society: education, healthcare and infrastructure, for example. In response to the urgent need to tackle the VAT gap, governments have invested in technology and inserted themselves into the financial supply chain — within the flow of invoices from supplier to buyer.
By implementing e-invoicing requirements, governments can essentially audit invoices in near-real-time for greater visibility to ensure VAT compliance. According to Ruud van Hilten, SVP at Tungsten Network, ‘It’s no longer the case that we can simply send an invoice and expect to get audited a few years later. In essence, you are audited before you complete the transaction.’
This is a logical path for tax authorities to take, but traditional businesses with paper-based processes may find it difficult to get aboard the digital transformation train — meaning planning is of the utmost importance.
Businesses need to budget for technological integration, decipher deadlines and mandates (in multiple countries in some cases) and remain compliant to avoid hefty penalties. But that’s not easy when the goalposts keep moving.
E-invoicing mandates: An ever-evolving situation
When governments impose new e-invoicing and live reporting mandates, the rollout isn’t always straightforward. E-invoicing is new for many countries, so continuous improvements are to be expected. For instance, mandates are sometimes introduced in phases, like in Szaud-Arábia.
Often, governments will make additional pieces of information part of an invoice — for example, Tax Deducted/Collected at Source. In India, income tax requirement has been added as an obligation for compliant invoicing.
Ruud van Hilten sums up the e-invoicing landscape for businesses around the world:
‘The point is that you have to stay on the ball with all the different obligations and make sure your back-end systems are ready to comply.’
It’s vital for businesses to partner with companies like Tungsten Network, who can absorb new changes and automate AP processes for guaranteed tax compliance.
Don’t miss out on the latest events in the global compliance landscape
At Tungsten Network, we understand that navigating the compliance landscape isn’t always a walk in the park — particularly in post-COVID times.
In our latest webinar, Ruud van Hilten provides insights into country-specific VAT compliance updates, explaining how you can fulfil even the toughest of requirements and meet your invoice automation goals.
Watch it here.