Key Components of a Successful Digital Tax Compliance!

Digital transformation in finance evolves and spreads all around the world. Especially for B2B transactions, governments require companies to operate their processes digitally. 

Therefore, Reg-Tech industry grows with tax authorities ambition to overcome misstated tax compliance, tax mistakes.

In this article, I’ll be briefly telling you about tax regulations in European Countries, the main pain points of this process and of course how you could overcome all those.

Tax Regulations in European Countries

Tax authorities all around the world mandated new systems. Why? It is usually to close the tax gap by reducing the amount of misstated taxes. 

Here are some examples of the expanding tax regulations; 

The UK:

In the United Kingdom, there is Making Tax Digital (MTD), meaning reporting tax digitally. HMRC aims to become a digital government and they are acting upon it. 

MTD regulation requires you to fill in a specific 9 boxes with links to details and submit it to the HMRC digitally.

Italy:

In Italy, there is FatturaPA which started in June 2019. 

The first 6 months were soft landing period, known as the “Grace Period”. Now, as of 1st of July, the Grace Period is over and that means penalties will be higher.

Reading offer :

Learn more about the changes and penalties that would apply after the Grace Period.

Spain:

SII (Immediate Supply of Information) was introduced in 2017 and as of 2019 there also will be RVTC, e-Waybill. Which obligates reporting transportation information instantly. Also, B2B e-Invoicing is expected in Spain too.

Hungary:

In Hungary, Real-Time Invoice Reporting is obligated since 2018. Now there are significant version transformations and a new updated version is expected in January 2020.

Norway:

Standardized Audit File for tax developed by OECD for tax authorities to identify misstated VAT entries. 

It is started in 2017, on a voluntary basis. it is expected to be required when Norwegian tax authorities demanded by 2020. This situation is called the on-demand model.

Poland:

SAF-T was already in use in Poland. Though with JPK-VDEK structure tax authorities will start to receive more transactional data monthly.

Reading offer:

Learn more about SAF-T as a Digital Reporting Innovation!

How about France, Greece and India?

There are discussions in France about B2B e-Invoicing and it is expected soon. Based on last year’s announcements, that goes for Greece as well.

In India, on the other hand, e-Waybill is in use and e-Invoicing is stated to become in use. More details are yet to come.

Main Pain Points of Tax Compliance

Companies within these countries are obligated to be compliant with these regulations. As the deadline approaches 3 main concerns to occur. 

  • How do I keep up with regulation updates?
  • How would the implementation process be?
  • How much would software which fulfills my need, cost? 

First, let me explain why these questions come up to mind and frankly why they should come into mind.

First Regulation UpdatesRegulations are like living organisms, they evolve and expand. Therefore selecting a software, evolving syncly with the regulations would be in your benefit. It would reduce the amount of effort, time and money you put in.

Secondly, The Implementation Process: Implementation processes can become more complex and confusing if you don’t prepare yourself for it. The vendors usually help you get prepared, of course, within the first phase. 

Actually this why, the Implementation process is considered as a pain point. The more experienced vendor is, the more straightforward the process becomes. 

Which data must be clean, what documents should be ready, what is your needs and could they be tailored. These are some of the questions which would make this process go through smoothly.

And finally the third one; Cost of the SolutionGenerally, these regulations have a few steps. For example; creating the document, transforming it into the desired format, submitting, and also keeping it digitally. 

In the market, most of the solutions don’t provide all of these services at the same time and that raises the cost, deepens the search and most importantly complexes the work you’d be doing after all.

How to Solve All These Problems

Well, observing these pain points, we have developed a solution which fulfills all the needs. Also, could be tailored, if it doesn’t cover all your needs: Sovos Foriba SAP Cockpit.

Let’s put down how our solution solves these problems;

Sovos Foriba SAP Cockpit is like an add on, we implement this solution inside SAP. It’s an end-to-end solution, meaning you don’t need any additional software. Our cockpit creates the document, in the desired format, submits it to the authorities and also keeps the records digitally. All in one solution. This, of course, reduces the cost.

Regulation updates as I mentioned are hard to keep track and to be adapted. We have a dedicated, experienced regulation team. They keep track of the regulations and make sure our solution is always on the right page. All you have to do is start to update button when the upgrade version notification comes along.

As for the Implementation phase, we have experienced and dedicated teams there as well.

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