How does the future of indirect tax reporting look like?
PwC Finland Tax and Legal Technology team held a webinar on the future of indirect tax reporting on 31 May. In this blog, we are trying to look into the future to help tax teams with preparing for the real-time reporting requirements.
VAT in the Digital Age: towards real-time reporting
Real-time reporting and e-invoicing requirements are growing rapidly. Originally, this trend started in South America. VAT in the Digital Age (ViDA) proposal by the European Commission will bring us closer to the age of compliance based on real-time reporting.
In brief, the ViDA digital reporting requirements would have following impact on the enterprises:
- Businesses will have only few days to issue and report the invoices.
- Recapitulative statements will be replaced by the Digital Reporting Requirements for intra-Community transactions as of 1 January 2028.
- Information transmitted needs to be transactional, not aggregated. New fields will be added in order to optimise tax fraud detection.
- Reporting of information on intra-Community acquisitions will become mandatory as of 1 January 2028.
- Harmonisation of existing and future reporting systems for domestic transactions to be done by 1 January 2028.
- Collected data will feed a newly established Central VIES (VAT Information Exchange System).
Dufry experience: “Don’t be afraid. It is an amazing journey.”
Our guest speaker, Global Customs and VAT Manager Ignacio Hinojo Albiñana from Dufry, a leading global travel retailer that operates in 66 countries, provides some insights on his own experience with tax technology transformation. Already now, in some cases Spanish tax authorities know the transactions better than the tax teams and have significant control over the data. Namely, they know a lot just with a VAT number of the invoices reported in real-time and can make decisions regarding the VAT deductibility based on this.
Ignacio highlighted that moving towards technology requires significant effort and investment. The investment, however, pays off. For example, deployment of a tax engine (a software for automating the indirect tax calculations) can become relevant for companies with international transactions.
In addition to having the right software, onboarding the right people is equally important. It would help the tax teams to have someone from IT involved throughout the transformation journey. Dufry were lucky to have SAP people with an accounting background that have a good understanding of the tax team’s needs. In similar projects, having a consultant with IT/ERP and tax knowledge would be beneficial and can help to save time.
Dufry team is also using Alteryx for processing and analysing massive loads of transactional data. Next, we will analyse how Alteryx can make the tax teams more efficient and happier.
Alteryx: how data analytics automation can make your tax function more efficient
Alteryx provides the leading analytics automation platform that helps to process huge loads of data. Analytics automation has a growing importance for multiple tax areas, such as tax strategy and planning, tax budgeting and forecasting, tax compliance, transfer pricing, and tax audit. It can save hundreds of hours spent on manual activities associated with tax calculations, reporting formatting, data quality and reconciliation checks.
Using Alteryx can simplify data connectivity and integration across multiple data sources (including ERPs, such as SAP and Oracle), as well as speed up preparation of input data for the tax reporting purposes. Alteryx also ensures increased transparency for the data transformation purposes and strengthened audit trail for the data processing pipelines. Enhanced analytics helps to identify new tax optimisation opportunities and get accustomed to the rapidly evolving tax landscape, especially in the multinational setting.
In the long run, active use of data analytics will contribute to more efficient tax risk management, streamlined tax reporting processes, as well as reduced tax burden. Together with PwC tax technology experts, Alteryx can also help your tax team to start the tax transformation journey through digital upskilling (for example, through organising workshops and hackathons).