Eight out of ten businesses still using spreadsheets for VAT compliance

Schermafbeelding 2015-10-15 om 08.56.42

More than 80% of businesses are still using spreadsheets to manage their VAT compliance in at least one jurisdiction in which they operate, despite tax authorities around the world investing in better tools. (International Tax Review by Avalara as part of their VAT Automation Summit)

Richard H. Cornelisse:

Many multinationals run various versions of ERP systems or legacy systems without harmonization. The ERP set-up is often per business unit and thus multiple set ups per country are possible.

This could be the root cause that:

  • running of system’s exception reports to look for missed opportunities, under claimed VAT and potential fraudulent transactions is still a challenging exercise
  • a lot of manual (re)work is often needed to file the VAT reporting and reconcile the VAT numbers due to the use of multiple spreadsheets and various data sources (divisions, different systems)

The latter is interesting as spreadsheets are usually found at critical points in the audit trail? And are often designed by non-specialists with no system expertise?

What should be considered from an audit defense?

The SAF-T standard, originally created by the OECD (similar as BEPS), is intended to give tax authorities easy access to the relevant data in an easily readable format for bot corporate income tax as VAT.

This leads to much more efficient and effective tax inspections. Data analytics will become the most efficient and effective way of future tax auditing.

From the articles: ERP systems and tax engines and Tax authorities peeking at your data.

Relevant chapters

  1. When is standard SAP (in)sufficient?
  2. Everything you always wanted to know about VAT in SAP * but were not aware to ask
  3. Tax engines questions to ask before you commit
  4. BEPS and Indirect Tax

About Richard Cornelisse

I advise multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework. I started my career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently I am a senior managing director of Phenix Consulting. I have over 20 years’ experience advising clients on international VAT issues. I am specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. I am also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact me.
This entry was posted in Automating complex VAT flows in SAP, Control Framework, SAP add on, SAP for VAT, VAT automation, VAT Control and tagged , , , , , , , , , , , . Bookmark the permalink.

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