92 VIEWPOINT As countries across the globe impose additional tax regulations, businesses need to adopt automation solutions to ensure their processes remain up to date and compliant ALEX BAULF: AVALARA Adapting to VAT and e-invoicing regulations Businesses transacting across the globe in the digital age have a whole host of rules and compliance regulations they must adhere to in the course of their normal operations. One of these compliance obligations revolves around value-added tax, also known as VAT. This is a consumption tax levied on the sale of goods and services in many countries, including the UK and in the European Union (EU). VAT is applied to transactions at every stage of the supply chain, from procurement of raw materials to manufacturing, distribution and sales to both businesses and consumers. VAT rules and rates for goods, products and services vary from country to country. While rates are important, finding out what’s taxable and what’s exempt from VAT is critical for businesses across the globe. In the EU, most goods and services are subject to VAT. However, businesses are generally able to take a credit for the VAT paid on purchases, as long as the costs are for business purposes and linked to an onward taxable supply of goods or services. For businesses, managing the VAT compliance lifecycle is paramount in complying with regulations, managing cashflow, avoiding penalties and building trust with trading partners and consumers. Keeping up to date with changes in the VAT ecosystem is crucial to ensuring a business is compliant. In addition to staying on top of changing rates and new VAT rules for products and services, it’s important for a business to look at how it’s preparing and submitting its VAT returns and how invoices are issued and received too. Companies looking to increase their compliance accuracy and significantly reduce their dependency on manual processes can implement automation solutions. These solutions are also important to help businesses sidestep substantial fines for noncompliance and interest charges in the compliance process. These types of tax automation solutions allow companies to prepare and file VAT returns and other indirect tax compliance digital reports in the countries where they transact, and automatically populate sales and purchase transaction data directly from accounting or enterprise resource planning systems. Solutions that focus on data verification and validation can identify possible errors and anomalies that can usually be fixed within the taxation period rather than requiring adjustments to the returns. Both the Avalara Calculations and the Avalara Returns & Reporting solutions, integrated with Microsoft Dynamics 365, offer a scalable way to calculate VAT more quickly and accurately and stay compliant and up to date on filings in over 60 countries across the world. Electronic invoicing, or e-invoicing, is also becoming an increasingly important compliance “It’s imperative for businesses to adopt solutions that automate manual processes and accelerate digital transformation”
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