As discussed in previous articles, technology is an imperfect tool. The digitalization of communication, organizational, and management systems, as well as the introduction of new business methods, connect people and companies in ways that were once never thought possible.
However, the picture is not perfect yet. As some systems are being updated faster than others, delays known as digital disruptions can occur.
The three main disturbances are caused by:
- Internal system updates lacking coordination
- A lack of systems in place to handle necessary changes
- The development of new technologies that have yet to be addressed by the current systems
VAT technology is one of those fields that is constantly being updated due to the rapid changes in international and intranational tax policies. While other systems may stay stagnant for long periods of times, the challenges of VAT management continue to grow. And digital disruptions may cause those challenges to multiply. Here are some steps your company to take in order to be prepared for any type of future interruption.
Be Sure Your VAT Technology Can Handle Digital Disruptions
In an interview with Risk and Compliance Magazine, David Brown, the Global Lead for KPMG’s Shared Services and Outsourcing Advisory Practice, said, “Organisations must take a broad, holistic assessment of how new technologies will impact their internal and external operations going forward.”
This is a very broad, but very wise statement. As technologies begin to overlap with one another, you must be able to see the big picture as to how each system will impact the other. VAT technology is complicated hardware due to the amount of data it receives from both inputs by the company’s employees and the managing database itself. The managers of the systems must not only understand their interactions but also have backup plans in place in case a digital disruption does occur.
While VAT technology has made the tracking, managing, and recovery of VAT a more straightforward process, it is still not 100% reliable. Companies must take this into account in order to neither lose track of nor take a loss to their potential VAT recovery.
Organize Your Internal Management
Managing VAT reclaims is an extraordinarily complicated manual process, and while technology makes it easier, it cannot be a company’s only focus. Technology can fail, digital disruptions can occur, and if there isn’t a backup system in place, it could cost an organization an exceptional amount of their VAT reclaim.
While training employees in uploading their relevant data correctly, remind them to keep hard copies of everything. That way, if there is an “all systems fail” situation, there is a fallback plan. Paper tracking may not be ideal, but in order to resolve any discrepancies or if certain systems cannot be accessed, information can still be registered, tracked, and maintained, in an effective manner.
Your CFO (or VAT manager, if you have a specific employee for the process) should always be prepared for the worst technical case scenario. However, it is also the responsibility of company management to make sure that the technology advances for all internal systems work together cohesively and do not cause negative effects upon each other.
Be Prepared for New Business Models
There is no doubt that digital services are the new trend. From international purchasing sites to travel-sharing sites like Uber or Airbnb, companies are losing VAT because they do not have systems in place to manage the VAT return systems for these online businesses. This is another element of the digital disruption that comes on a global level.
Standard VAT tracking systems are not equipped for the data needed to track everything related. While each country is recognizing the need to incorporate digital business into their tax policies, these new regulations are slow to be released and are certainly not being released together. As each country sorts through how they plan to handle digital taxation, a company’s VAT technology must constantly be updated in order to keep up with the daily changing taxation policies.
VAT policies do not seem to be getting any simpler any time soon, and as international business continues to grow, companies need to be prepared to take that into consideration. Managing this important element of tax policy will become critical for both a company’s financial well-being and its international standing.
How VATBox Can Help
VAT refund rules are extremely complex and vary across countries. Using its expert knowledge, proven processes and clear procedures, VATBox has successfully streamlined the global VAT recovery process, providing businesses with unrivaled visibility, compliance, and data integrity. Leveraging the cloud and utilizing full automation, VATBox exhibits complete control of a company’s VAT spend, while providing businesses with unrivaled visibility, compliance, and data integrity. To explore how VATBox can help your business, schedule a demo today.