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Digitalization of indirect tax – towards a real-time data flow  

The vision of future taxation is clear: taxation should be automated and real-time. We see already today legal schemes requiring continuous data flow from taxpayers’ systems to tax authorities’ systems. Responding to digitalization of indirect tax is a transformation journey that starts with understanding the varying local legal requirements and reviewing existing systems and process and ends with system implementation followed by continuous monitoring of the legal changes and respective process improvements. Managing all this requires seamless cooperation between relevant stakeholders in tax, finance and IT to come up with a clear vision, roadmap and action plan to maintain compliance in an optimal manner.

13.10.2022

Drivers of the change

The digital transformation of tax reporting has been ongoing for more than a decade already. The change from manual retrospective reporting on paper forms to electronic reporting of up-to-date transactional data in a standardized format has taken multiple steps already until today and the progress is speeding up. 

While most of the current electronic reporting requirements are still based on the traditional VAT return concept, there are more and more of “near-time” or real-time reporting requirements which require also transactional data attributes to be transferred to tax authorities in certain format.

 “Business may have strong preferences to digitalize the invoicing also when it is not required to do so from legal perspective. On the other hand, the overall tax operating model, the IT system landscape and the legal requirements may set some requirements to the solutions used for e-invoicing and e-reporting. Thus, making final decisions on the solutions to be implemented is always a result of thorough discussions between all the relevant stakeholders of the company”, Partner, Tax Operations Johanna Oksa says.


How to ensure compliance in the future?

From taxpayers’ perspective the e-reporting and e-invoicing requirements are non-negotiable as they are based on the law. However, the legal requirements around e-invoicing and e-reporting vary a lot on a country-by-country basis. As far as there is no global or regional standard for these, this remains to be the challenge and increases the effort of being compliant globally.

The variety of requirements in relation to data attributes needed, data formatting standards and data transfer technologies makes it sometimes difficult to even categorize the requirements. This typically leads to implementation of several local systems and / or services to ensure compliance. They slow down development cycles and increase maintenance and development effort.

“In order to facilitate the journey in building global scale capabilities for e-invoicing and e-reporting, we help leading companies to select applicable solutions and service providers that best fit with intended capabilities and operating environment of a multinational company”, Kimmo Pekkola, Partner Technology Strategy and Transformation, notes.
 

This is how we can support you

The Deloitte DIT community (supported by local Deloitte offices) is actively monitoring e-reporting and e-invoicing obligations around the world. Our clients are supported by core team which is helped globally by at least one designated individual in each country where Deloitte has an office. The community has regular interactions to share the latest developments in indirect tax globally as it relates to e-reporting and e-invoicing. 

 

What does the digitalization of indirect tax mean for your company in the future? You are welcome to download our comprehensive info package here.

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