In the last couple of years we had the honour to speak to many top-tier VAT experts from all over the world in our series VAT Talks. The knowledge they shared is invaluable for any VAT professional. Therefore, after an episode about confidentiality and the advantages of real-time reporting, in the following we will share the experts’ view on how companies can optimally benefit from real-time reporting.
Focus on digitalisation of VAT reporting and other business processes
Many VAT experts emphasised that by implementing real-time reporting VAT compliance can be fully digitalised and even (to a certain extent) automated. Consultant and tutor in tax administration at the Inter-American Center of Tax Administrations (CIAT), Alfredo Collosa, told us that in Argentina where real-time reporting is coupled with e-invoicing “it is actually now way easier than before as all this paperwork belongs to the past.”
Kelvin Hulsebos from our favourite VAT news website VAT Update agrees: “If this [the implementation of real-time reporting] is done in the right way, then there are only some costs in the beginning to set up everything. Afterwards, everytime you send an invoice, it should also go to the tax authority’s portal which could also provide advantages for companies.”
Paul Gisby from Accountancy Europe agrees: “for me, when speaking about digitalisation, we’re talking about exchanging short term costs and disruptions for, potentially at least, much larger longer term improvements in efficiency, reduced costs, better tax payer experience and governments being able to keep control over their tax bases. It’s interesting to see that Brussels SME representative organisations really believe in digitalisation. Furthermore, they support real-time reporting, because this should lead to a big reduction in costs for SMEs. Real-time reporting could drastically reduce the burden of financial reporting and tax reporting, through pre-filled tax returns, which could be very valuable for SMEs.”
Cyrille Sautereau, president of the Forum National de la Facture Électronique et des Marchés Publics Électroniques states that when combined with e-invoicing companies “can benefit from automation and process acceleration, because when the invoice process is accelerated, the buyers are able to pay earlier and then get rebates from dynamic discounting or propose reverse factoring. On the supplier side the main benefit is to know if the invoice is processed, approved (or not) in order to manage cash collection.”
Make sure your data is correct
So companies can benefit from digitalisation. At the same time this digitalisation makes it even more important to report the correct VAT amounts to the tax administrations. Aleksandra Bal from Stripe argues that “the most important thing is to be sure that your data is correct and complete. You will be sending your data in real-time to the tax authority, so there is no time for post transaction verification. You cannot take a look at your data at the end of the month and make some adjustments. This actually makes tax data even more important than it already is. There is this famous principle ‘Garbage in, garbage out’. If your data is incorrect, your return will never be correct. So you have to be sure that you have correct and complete data. Furthermore, you have to transmit it in the correct format.”
Start preparing early
Real-time reporting systems are rapidly becoming the standard all over the world or as VP Strategy at Sovos Christiaan van der Valk puts it: it’s “an irreversible trend”. Therefore the best advice might actually be to prepare early. CEO of VAT Calc Richard Asquith also warns of this because “sometimes they [governments] rush out these reforms without proper consultation. That results in businesses having to go to outside consultants, or doing manual work, which is what we actually want to avoid.”
This requires preparation which is also stressed by SAP expert Marinus Peters: “In those countries, you sometimes need to think ahead and if your organisation is not prepared for that you’ll be too slow. If you don’t have the resources in-house you can go to an external party, but this will also bring additional costs of course.”
By joining summitto’s pilot, companies can make sure to optimally prepare for the next iteration of real-time reporting. TX++ has been demonstrated to a wide variety of tax authorities, but we’re always looking for additional companies that want to test its capabilities. So send us a message at firstname.lastname@example.org if you want to help to make real-time reporting as business-friendly and secure as possible!
We want to again thank all the VAT experts that were willing to share their knowledge with us.