INDUSTRY WATCH
with threatening hefty non-compliance fines . Trading and operating within the law now requires intelligent technology and infrastructure to cope with the strain .
Latin America pioneered mandatory B2B clearance of e-invoices , and Brazil also requires full clearance through a government platform . In Europe , the EU-VAT directive prohibits countries from introducing full e-invoicing – Italy was the first ( and currently only ) country to buck this trend in 2019 , following a lengthy derogation process . Elsewhere , in Finland , a loophole was developed to avoid this while staying compliant with the EU regulation . Moving towards a digital tax regime is set to continue as economies shift to a data-driven business model .
Machine language
Top priority for most governments is to reduce the VAT gap caused by fraud and human error in reporting business activity , so naturally many systems have been adopted across the globe , subsequently creating a patchwork of systems unable to communicate with each other . What ’ s more , the adoption of e-invoices has been slow on the uptake in many countries causing a completely fractured landscape – VAT information is still being reported periodically in many countries , with each jurisdiction setting its own standard . It ’ s clear that consistency isn ’ t on the cards for global digitalisation .
The rules are becoming even more ambiguous and unclear as more countries develop their own specific take on digitising invoicing . Further , with new regulatory legislation constantly surfacing , keeping track can cause headaches and trip some firms up . Keeping tabs on the developments as they
Oscar Caicedo , VP of Strategy and Operations , VAT at Sovos
happen in all the countries a firm operates in is the only way to maintain compliance , so applied systems must be able to track and update the new legislation as appropriate .
Equally , tech needs to give an accurate picture of an entire businesses ’ finances , linking together all the different systems to make sure any tax reporting is accurate . This is why , when adopting any technology , flexible APIs are an absolute must . Programmes with sophisticated APIs enable tax systems to ‘ plug in ’ to a business and gather vital information , allowing firms to showcase the necessary data from across their activity , generate accurate results and avoid government penalties . When approaching sensitive government interactions , technology must be able to integrate with a number of billing systems , ERPs and procure-to-pay platforms . They all create and handle enormous amounts of data , so much so that humble finance teams simply can ’ t cope – which is where technology can support and streamline the job .
Automation of formatting and information as per the requests of each country is essential for transaction and reporting digitally . Technology that can monitor and adjust invoice formats , for example , to suit the country a business is operating in can help avoid noncompliance penalties , so is worth the investment . Time is of the essence – and time is usually not on our side – so any tools that can automate admin and allow teams to focus on strategic elements of business finance will pay for themselves in dividends . The fact is , as machines become more ingrained in operations , the more challenging manual analytics become . Both governments and businesses are leaning on automation and advanced technology to ease the resulting administrative burdens .
Automation for compliance
A fully digital way of working is within reach for many economies , but it comes at a price . The only way to capitalise on the rapid wave of Digital Transformation is to arm yourself with technology that can cope with a new realm of complex and data-driven regulations . Meeting varying global audit requirements has always been a challenge , but now software has been developed that can handle labour-intensive analysis and research tasks . It makes sense to invest in tools that will streamline this process and alleviate some of the pressure on finance teams without the need for costly expert staff or outsourced support . Manually submitting the paperwork for audits and reports once they are understood is no longer a viable or practical route to take .
Put simply , all tools applied must be able to synchronise and communicate vital information across a business ’ IT infrastructure . The current recession has deepened the pressure on finance teams to perform at their best , safeguard against any financial leaks and strictly monitor expenses and outgoings . With this in mind , there ’ s a strong business case for investment in automation to manage arduous and complex tasks like international trading activity reporting .
Up against such adversity , machines are guiding and supporting us through the most troubling of times . An armoury of digital tools can only help pave the way for a successful digital future . •
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