More than 80% of businesses are still using spreadsheets to manage their VAT compliance in at least one jurisdiction in which they operate, despite tax authorities around the world investing in better tools. International Tax Review by Avalara as part of their VAT Automation SummitRichard H. Cornelisse:
Many multinationals run various versions of ERP systems or legacy systems without harmonization. The ERP set-up is often per business unit and thus multiple set ups per country are possible. This could be the root cause that:
- running of system's exception reports to look for missed opportunities, under claimed VAT and potential fraudulent transactions is still a challenging exercise
- a lot of manual (re)work is often needed to file the VAT reporting and reconcile the VAT numbers due to the use of multiple spreadsheets and various data sources (divisions, different systems)
What should be considered from an audit defense?
The SAF-T standard, originally created by the OECD (similar as BEPS), is intended to give tax authorities easy access to the relevant data in an easily readable format for bot corporate income tax as VAT. This leads to much more efficient and effective tax inspections. Data analytics will become the most efficient and effective way of future tax auditing. From the articles: ERP systems and tax engines and Tax authorities peeking at your data.
- When is standard SAP (in)sufficient?
- Everything you always wanted to know about VAT in SAP * but were not aware to ask
- Tax engines questions to ask before you commit
- BEPS and Indirect Tax