© 2021 RSM US LLP. All rights reserved.
VAT automation in a global marketplace
Simplify and automate decision-making and compliance with technology
The main drivers for businesses to automate VAT processes are:
- Improve accuracy and consistency of transaction tax decision-making
- Reduce the risk of error, which leads to tax audit scrutiny and penalties
- Reduce the amount of time spent by staff on routine and repetitive tasks
- Support the compliance process by producing data that is tax return ready
- Create a clear audit trail and environment that supports business needs and tax audits
- Manage data in order to make better-informed business decisions
Most businesses manage their transactions through an Enterprise Resource Planning (ERP) system. With some VAT technical knowledge, these systems can be configured to automate VAT decision-making and accounting and support a streamlined compliance process through effective reporting. While commonplace, this native setup requires maintenance of VAT rules and VAT rates from within the business. Alternatively, some businesses turn to a tax engine, a third-party application with local VAT rules, regulations and rates already written into its code, which is automatically updated with any changes. The ERP system passes transactional data to the engine, and the engine returns VAT decisions to the ERP system.
ERP systems and tax engines, despite their innate functionality, do not work for VAT out of the box: They both need VAT technical configuration to enable functionality and ensure effective application.
Indirect tax automation alleviates tax burden
An automated system helps streamline the tax compliance process, improve accuracy in decision-making and reduce risk.
VAT automation provides U.S. companies with foreign VAT-filing obligations, as well as foreign companies with U.S. operations, the ability to address and improve virtually all areas of VAT compliance and decision-making.
Consider VAT automation to:
- Mitigate the risk of human error
- Make VAT decisions accurately and consistently
- Accelerate the process of making VAT decisions
- Support business continuity (given less dependence on HR)
- Generate reports that are instantly relevant to support VAT compliance processes
- Generate invoices containing all required data elements to meet local invoicing regulations
- Support VAT audits and reduce management time in dealing with tax authority enquiries