Leveraging VAT technology to maximise VAT reclaim and ensure compliance
The digitisation of the VAT world
The past five years have seen more sweeping digitisation in the tax world than the last fifteen. While technology has made processes easier and more transparent, it has also created more strain on a company’s infrastructure. As tighter controls and more requirements for real-time reporting have emerged across the globe, keeping up with VAT reporting requirements has become more than a full-time job.
Specific country requirements
It’s difficult enough to ensure real-time reporting in one country, but for multinationals, keeping up with diverse requirements and deadlines in countries around the world has become a full-blown nightmare. Just within the EU for example, Italy has introduced controls on invoicing, Spain has Immediate Supply of Information (SII) with a three-day window for reporting, and similar schemes have been implemented across Poland and Hungary.
Add to this complexity the fact that only a third of the countries with a VAT mechanism allow cross-border reclamation and those that do have complicated rules. Germany, for example, allows VAT recovery from a trip to Germany only if your country does not have a VAT mechanism. France doesn’t allow VAT reclaim when an employee stays in a hotel but will allow it for business guests. The UK allows reclaim on employee hotel stays, but not on most client entertainment. And that doesn’t even begin to cover the differing rules across Asia and South America.
VAT technology provides companies with fast revenue
As more countries adopt their VAT regimes, especially those seeking revenue after a difficult start to 2020, this can mean that the rules for visiting are altered quickly. With real-time reporting requirements, constantly changing rules and often high penalties for mistaken claims, it’s no surprise finance teams often ignore VAT reclaim entirely. Unfortunately, this means significant money left behind, and in the tough times we’ve seen so far in 2020, this is no longer an option for many.
Benefits of using Artificial intelligence
Fortunately, advances in VAT technology can support company VAT reclaim efforts as much as they support government reporting. Artificial intelligence and optical character recognition make it easier to respond quickly to real-time reporting requirements. The ability to use Artificial intelligence and optical character recognition is especially important for analysing employee expenses, which are often overlooked but still make up a significant percentage of total company spend. In addition, AI and OCR can help minimise the amount of incorrectly completed reclamation requests- ensuring companies avoid costly mistakes as well as capturing all VAT owed to them.
As global tax reporting requirements continue to evolve, the best defence is a good offence- the right VAT technology and the right partner to help you navigate changes. For more in-depth information, check out the Taxback International website.