VAT PROCESSES
The transition to real time reporting
Christiaan Van der Valk considers global government mandated digitisation for VAT reporting, including continuous transaction controls.
T
he first decade of the new millennium saw governments globally test the waters of new e-invoicing models. During the last decade, continuous transaction controls (CTCs) and e-accounting initially swept across Latin America to improve tax collection. Digitisation of tax administration and private sector VAT processes had long lagged behind general business and government practice – because of the strict nature of VAT regulation and nervousness about the auditability of electronic data. Today, many governments are evaluating and implementing innovative VAT and general fiscal law enforcement models based on mandatory data transmission by businesses source systems.
Continuous transaction controls
CTCs encompass a variety of requirements AIAWORLDWIDE.COM | ISSUE 122
for e-invoices and similar transaction documents to be sent to – and often pre‑approved by – the tax administration in real time or near-real time as part of the communication process between suppliers and buyers. Jurisdictions that already have CTCs in place have shown not only improvements in VAT collection, but also greater digital resilience. The global health crisis armed governments with established CTC programmes with all the evidence needed to argue that rapid digitisation was essential to a modern economy where tax is paid as due and policies can be varied flexibly based on advanced data analytics. Digitising tax reporting processes has allowed early innovators to reduce VAT gaps and eased the burden of traditional reporting methods on administrative staff. While CTC introduction has not always been easy on businesses, many
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Christiaan Van der Valk VP of Strategy and Regulatory, Sovos
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