![]() ![]() "Businesses are probably spending more money than they need to. Tax leaders need to ask: What are the key requirements within ViDA that will impact the business? Tax functions need to ensure they are at least facilitating and kicking off that discussion because, ultimately, they are responsible for informing the company of those new and evolving requirements across its country footprint. Otherwise, there will be challenges in implementation," says Maria Hevia Alvarez, EY Global Indirect Tax Deputy Leader. "What we are seeing with e-invoicing is that it often does not fall under tax, but the tax function must be part of those discussions. The key is ensuring nothing falls between the cracks. Establish a matrix clearly establishing departmental responsibility (which is responsible, which is accountable, which is consulted and which is informed) and a governance model that underpins it. There needs to be internal alignment to tackle ViDA and the tax function needs to play a critical role from the outset. That's where your choice of how you will use technology, process and people matters a lot." For instance, they may be planning to tackle France next year and use that as a blueprint for every other country, whether in Europe, in APAC or the Middle East. "Many clients are taking a small step first. "There is definitely awareness and a sense of urgency," says Arman. Not all EU businesses and those that trade in the EU are fully aware and prepared for the fundamental change ViDA will bring. Organizations need a strategy because of the cost of a vendor selection every time there is a change and rushing to implement each solution takes time and effort. Technology is a component of that strategy, whether a single provider or several regional platforms. Larger organizations are using ViDA and the rise of e-invoicing as an opportunity to take a step back to consider a strategy, not just a solution. ViDA and e-invoicing requirements will catalyze the work that many organizations need to do to better integrate tax and other business elements regarding data management and usage. ![]() How ViDA will drive organizational change globally While businesses can incur high implementation costs, electronic invoicing can, over time, reduce business spending and stimulate the broader digitalization of taxation-related processes. Near real-time availability offers even greater possibilities for quicker and more in-depth analysis of economic developments and forecasts. It can assist in closing VAT gaps, prevent unintended errors, enhance risk management capabilities and early detection of fraud schemes. The advantages of e-invoicing and real-time VAT data for tax authorities are clear. This means that all businesses operating in the EU will have to transition to digital invoices. This shift towards digital invoices has been in development by Italy and France for a few years, and it is expected to become the norm in every Member State. It impacts the vast majority of the business because before being a tax process, it's a business process," says Pierre Arman, EY Global Tax SaaS Go-to-Market Leader. It will touch finance, operation, procurement, IT and tax. "One of the great things about e-invoicing is its business-wide impact. ![]() It is a powerful potential lever that tax teams should use to improve their processes, data, and quality issues. The tax function will play a critical role, but the interdisciplinary impact is significant, as are the opportunities it creates. ViDA will drive fundamental change within organizations. ViDA is "a complete game changer at the European scale," says Gwenaëlle Bernier, International Tax Partner at Ernst & Young Société d'Avocats – France. One of the key proposals is the move to real-time digital reporting based on e-invoicing for businesses that operate cross-border in the EU. ViDA's series of far-reaching VAT measures, which aim to reduce the €93b VAT gap in the EU and to make the VAT system more efficient for businesses, revolve around three pillars: e-invoicing and digital reporting, the single VAT return for trading across the EU, and the platform economy. It also aims to address the VAT problems created by the growth of the platform economy. The proposal includes measures to modernize the VAT system to avoid fraudulent activities, primarily through digitalization. On 8 December, 2022 the European Commission (EC) published the VAT in the Digital Age proposal (ViDA). ![]()
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