State of the market: Top trends in VAT reporting

There is little doubt that the volume of change we’ve experienced across the world in the last 18 months has been extraordinary and the world of VAT and tax obligations is no exception.

Driven by external forces such as the VAT gap, tax fraud, a need for cost efficiencies and the Covid-19 pandemic, we have experienced an acceleration in VAT reforms across the globe.

Keeping on top of these changes and trends is a task in itself; and Avalara is here to help.

As a leading provider of tax compliant software and solutions, we have exclusive access to the latest insight, trends and challenges that our customers are experiencing.

To help navigate you through these changes, our tax experts are on hand to share their expertise wherever it is needed.

In a recent webinar, Avalara’s senior VAT experts Ruby Buckland and Reece Duncan shared with us three key trends that they see affecting businesses across the globe.

Here’s what they are hearing as the key trends in tax and VAT reporting: 

1. Acceleration of digital reporting requirements:
   The digitisation of tax has been on the horizon for many years but it has undoubtedly been accelerated by the Covid-19 pandemic. Although the requirements of digital submissions vary across countries, new requirements such as e-administration which requires a stamp of approval before the invoice has been submitted, through to Portugal's requirement for a 2D QR code to be included on all invoices highlights how prevalent digital technologies are becoming. It is advisable to ensure your systems are set-up to help you remain compliant.
   
   
2. Regularly updated accounting systems:
   Both Accounting systems and additional Tax systems must be kept up to date in order to remain compliant with the ever-changing VAT landscape. Customers are regularly asking themselves questions such as: how often are our systems updated? Do we have the latest tax content (i.e. rates and calculation logic)? Are we storing the right information? How protected is our data? Do we have the right technology to meet the needs of the markets we’re trading within? These are just some of the key questions businesses are regularly asking themselves. In doing so, it supports the future proofing of your business.
   
   
3. Ensure the VAT determination is correct:
   Research from the Organisation for Economic Co-operation and Development (OECD) suggests that VAT has grown steadily in importance from less than 5% in the 1960’s to nearly 20.2% in 2016. What this means, is that its expansion has been driven by nations seeking to reduce corporate income taxes. For business owners, in-country VAT rates are set at different levels, with additional complex laws to determine the correct VAT treatment on transactions. Understanding what these are in each of the countries in which you operate is critical in order to avoid potential penalties/fines, and with tax authorities globally moving towards reporting VAT transactions within seconds to the authorities (such as Italy), ensuring the VAT treatment is correct immediately is more important than ever! 

If you’d like to find out more about the evolution of the VAT return, you can listen again to the session with Ruby and Reece or contact us today for further support. We’re here to help.

To catch Ruby and Reece live, talking all things live reporting, sign up for their workshops at Avalara Inspire Virtual 2021 taking place October 21.