Women discussing VAT Digitalisation

VAT Digitalization – The Evolution of VAT Returns

In a globalised economy, the need to register for VAT and manage VAT returns is one of the pain points many taxpayers have to face. Often, some of the tax laws are not clearly understood by taxpayers, there is a language barrier and processes for filing the returns can be complex; the anxiety for fear of tax penalties for non-compliance can be high.

However, VAT returns have evolved during the years. Long gone are the times when tax returns were submitted in paper form, putting pressure on tax offices and taxpayers’ resources. Digital technology has simplified procedures improving compliance levels for taxpayers.

Taming Tax Processes with Technology

As the application of artificial intelligence across industries is increasing, tax administrations are also evolving and introducing new requirements. Many jurisdictions have already introduced real-time reporting of transactions to enable transparency and consistency of reporting. Some jurisdictions have been focussing on the automation of processes.

However, the overall aim is the same for everyone: transparency, traceability, and reliability of reporting as tackling VAT fraud is high on the agenda of tax administrations globally.

New reporting rules require businesses to amend their systems and processes to respond effectively. Their investment can be substantial in terms of human and financial resources and outsourcing may be considered to adopt a solution providing more automation, control, and flexibility.

What are the benefits of digitalisation?

The benefits of adopting these solutions are multiple as deadlines for submission are automatically monitored for all the jurisdictions in which a VAT return is due. Reminders can also be sent to the person responsible for VAT compliance within the organization.

The risk of incurring penalties for late submission and payment is reduced. Also, errors in transactions are identified and reported, allowing correction before submission and payments are made on time.

Technology is Changing Responsibilities

With the adoption of new technology, the responsibilities of the VAT return preparers have changed. Previously, they were concerned with the collection of data, analysis, preparation, submission, obtaining required approvals, and arranging for payments. Now their responsibilities have shifted to monitoring the automated process, picking up on the exceptions, ensuring that the transactions are amended where necessary and reported. Obviously, approvals are still required to be obtained along the process.

However, the process is much leaner and, eventually, as systems develop through machine-learning, no human intervention will be required until the payment.

Technology is constantly evolving, offering a level of sophistication that can exceed human abilities. We can easily predict that as VAT adapts to a changing economy and it becomes a revenue raiser, tax authorities will want to monitor the tax more closely, potentially being able to trace all transactions and device revenue collection methods to abolish VAT refunds and eliminating VAT returns.

Until such time, businesses will still be concerned with adapting to new digital requirements. Businesses should be thinking of time proofing their investment into digital VAT/Tax solutions, considering the cost of adaptation to the tax authorities’ requirements. Therefore, any software should be flexible enough to keep up with future requirements for VAT reporting.

Tackle VAT Digitalisation Using Comply

At Taxback International, we are at the forefront of VAT compliance technology and have developed Comply to help businesses efficiently tackle compliance obligations. Comply is a unique software that provides full visibility on your VAT return status and a fully automated end-to-end VAT return process.

If your business is in need of assistance with managing multiple VAT registrations across various jurisdictions, contact us today.


Adapt to Technology with Taxback International

For over 25 years Taxback International has been a world leader in VAT consultancy and compliance providing expert support to more than 12,000 global clients including Apple, Google, IBM, and Twitter.

With increasing digitalization of global tax processes, we have developed tailored technology solutions to solve challenges facing companies today.

  • Comply – End-to-end VAT compliance platform.
  • TBI Pay – Streamlined cross-border payments technology.
  • VAT Connect – Cloud-based, automated review of transactional data and images via AI and Machine Learning for Domestic and Foreign VAT Reclaim.


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