Today, governments around the world rely more heavily on value-added taxes (VAT) than ever before. Most are looking for new ways to ensure they are capturing all that is due as an increasingly vital revenue source. Yet, the VAT gap—the difference between expected revenue and the amount actually collected—persists due to fraud, evasion, and miscalculations.
As a result, tax administrations around the world are adopting new and more expansive compliance requirements introducing new data demands, processes, and requirements to close the VAT gap and make government tax collection smarter and more efficient.
The new mandates for VAT include obligatory e-invoicing exchange and real-time reporting. Under these systems of continuous transaction controls (CTCs), tax authorities collect transactional data, from accounts receivable (AR) via businesses’ billing systems either in real or near real-time. The tax authorities record the transaction details, the sale amount and the VAT to ensure that subsequent VAT payments, and VAT claims on the buyer side, match the VAT stated in the transactions.
For US companies operating globally, managing such high-touch VAT compliance amid rapid regulatory change may seem overwhelming—especially when facing large transaction volumes, high VAT throughput, and different reporting rules in every geography. Yet accurate reporting at every point in the supply chain is critical for both profitability and business-to-government compliance.
KPMG LLP and Sovos can help you design and deploy solutions to address CTC e-invoicing and real-time reporting mandates. Taking advantage of KPMG’s experienced tax professionals and Sovos’ software, you can implement a single-platform solution that meets evolving VAT compliance requirements across multiple countries and delivers the efficiencies of a modern, cloud-based tax solution.