Global Digital Tax Compliance is Becoming a Reality

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Compliance across all taxes, statutory accounting and tax reporting is becoming increasingly complex. Companies are struggling to do more with less while driving value out of their tax and finance functions.

The centralisation of finance and accounting functions presents additional challenges when dealing with complex local rules, disparate technologies, and manual processes during the compliance cycle. This results in a greater risk of compliance failures and minimal time for strategic forecasting or planning.

Many companies are rethinking their approach to domestic and global compliance and reporting by taking a closer look at their technology, processes, resources, and service providers. Leading tax functions are using co-sourcing/outsourcing as a critical component of tax function strategy, and as a means to better align tax function investments and use of talent with organisational goals.

With more cross-border business transactions happening around the world, the reality of global digital tax compliance comes into focus.

Transforming Compliance

According to Scott McFarlane, CEO, Avalara (a tax compliance automation software maker), it’s already happening, and tax professionals and advisors need to take notice. “Entire countries are going digital. When you make a purchase, you have to get permission from the government in some countries. Digitizing tax compliance is starting to happen around the world, it’s a train coming down the track. On top of everything, you now have Amazon collecting sales tax in every state. This is a harbinger of things to come.”

Tax compliance is, as McFarlane referred to it, something our own country was founded on … or rather, the after effects of a dispute over sales tax. Still, a few hundred years later, we haven’t figured it all out, but the promise of technology’s role has become clearer than ever.

Going Paperless

Some figures tax professionals in attendance at CRUSH , Avalara’s second annual national tax compliance automation conference  were told to take note of where the $18 trillion (N7,200tn)in cross-border sales around the world; the one in three businesses in the United States stating they will start selling cross border; and the 17 major countries that are making moves to change the way they tax.

By now, all tax professionals have become strikingly aware of how connected their clients, and the world, has become, and McFarlane sees a convergence happening between how global business functions and the pivotal role technology will play .

The Seamless Integration

The promise of the Internet is dependent on the ability to comply. States and countries are now more avid about collecting their due, he said. “The Avalara vision is to be a part of every transaction in the world. Things like exemption certificates are becoming a bigger deal in tax and we want to make the compliance process easier and simpler. We want to be the first company to digitize exemptions,” McFarlane added, noting that many businesses are still storing these compliance forms in shoeboxes and file cabinets.

So again, could we ultimately see a world where the government – all governments – are able to know necessary compliance information at the time of transaction, taking out all necessary local, state, and federal taxes? McFarlane affirms it is already happening. What do you say?

Additional Source
www.accoundingweb.com
www.pwc.com