Partner Article

Growing Digitization & Government Legislations Driving Move From Legacy To Real-Time Reporting

A new report has highlighted the growth in real-time VAT tax reporting as governments, empowered by new technology and capabilities, have inserted themselves into every aspect of business operations and are ever-present in company data.

Latin America has led the way with innovation in these legislative areas in recent years, but Sovos’ Trends report has revealed Europe is starting to accelerate the digitization of tax reporting - impacting any business that manages VAT payments in the respective region.

Through a rapid succession of new laws in this area tax administrations are increasingly requiring businesses to send them what amounts to all their live sales and supply chain data as well as the entire content of their accounting systems. This level of access to company finance ledgers creates unprecedented opportunities for tax administrations - and other parts of government, including law enforcement and competition authorities - to triangulate a company’s transaction source data with their accounting treatment.

“Governments increasingly have all the evidence and capabilities they need to drive aggressive programs toward real-time oversight and enforcement,” said Christiaan van der Valk, vice president of strategy and regulatory at Sovos. “We have already seen these programs envelope most of South and Central America and are quickly spreading across countries in Europe, such as France, Germany and Belgium, as well as Asia and parts of Africa. We are seeing firsthand the pace at which governments are establishing and operationalizing new standards of oversight and just how quickly they are moving to enforce these standards.”

With always-on enforcement, data contained in systems such as ERPs, accounts payable/receivable, procure to pay, order-to-cash, supply chain and logistics, and HR and payroll have to comply with local standards and mandates as the information traverses IT infrastructure. Failure to comply may lead to business disruptions or even stoppages.

“This new level of imposed transparency is forcing businesses to adapt how they track and implement e-invoicing and data mandate changes all over the world. To remain in compliance, companies need a continuous and systematic approach to requirement monitoring,” said Steve Sprague, chief strategy officer and general manager of global VAT, Sovos. “Bottom line: governments are in your data, and if you don’t comply with their mandates, they can shut you down.”

This was posted in Bdaily's Members' News section by Sovos .