Digital transformation and VAT returns
During the course of 2020, the acceleration of the adoption of digital technology was extraordinary.
Analyst predictions for the growth of the digital world were blown out of the water when we were confined to our home and reliant on living our lives and conducting business solely online. While restrictions have eased in many countries, this shift towards the increased reliance of technology is unlikely to revert to previous use. In fact, data now suggests that 95% of purchases will be made online by 2040.*
The adoption of technology in VAT and tax returns brings with it plenty of benefits: for example, the ability to enter new markets, better communications with customers and authorities and of course, a real opportunity to address the growing issue of VAT fraud.
Understandably, many businesses had to quickly adapt to the shift without having had the time to properly prepare for what this might mean in the longer term. However, both technology and tax legislation change so quickly it’s imperative for those who are keen to continue to grow to stay ahead of the curve and keep up to date with the digital changes.
If you haven’t already, now is the time to consider what systems you have in place and examine what you might need to future-proof and protect your business.
In a recent webinar, Avalara’s senior VAT experts Ruby Buckland and Reece Duncan explored the latest trends in this sector and offered their advice on the steps you can take to effectively utilise technology to enable positive change. Here’s what they shared:
- Map your requirements.
List out the requirements and the areas that you’re trying to transform.
Questions you need to ask yourself are:
- Are accounting systems set up to capture all the information that’s needed?
- How compliance-friendly are they? If not, are you completing your VAT compliance manually?
- How dynamic are your systems? Can they be easily updated to meet any upcoming legislative changes?
- Where are you today versus where you want to be?
Once you have this, you need to consider what the impact is to the business if you don’t comply. Use these findings to help build the business case for any changes which might be needed.
- Conduct a regular review:
Schedule frequent opportunities to review your systems. With the rate of technological change and the shifting VAT landscape, compliance requirements may be more instantaneous than previous years. Ensure you understand your VAT determinations and submission requirements for the countries in which you operate are updated regularly.
- Seek external expert advice:
You may wish to consider seeking the support of an external partner. Working with a provider such as Avalara means you can have access to expert advice whenever you need it. A good partner should be able to proactively advise you of any chances which are likely to directly affect you and your business, helping you remain compliant and competitive for years to come.
To hear more from our experts on the role of technology in tax compliance, listen again to our webinar with Ruby and Reece or get in touch if you need any further support.
And to them live, talking all things live reporting, sign up for their free workshops at Avalara Inspire Virtual 2021.
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