VAT AUDIT

Adding Real Time Analytics to your Tax Department’s Indirect Tax Toolkit

eBiz Answers have recently added Real Time Tax Analytics to their indirect tax toolkit,  the application has designed specifically with the tax department in mind.   Real Time analytics is a user friendly web application which will inform the tax department of a transaction with a potential tax issue within seconds of it being entered.   This allows the tax department to identify and correct issues at source and empowering the tax department to be involved in the end to end process.

The ever increasing use of technology by Tax Authorities for tax compliance is directly impacting the inner workings of the tax department.     The VAT landscape is changing rapidly across the globe as Tax Authorities introduce technology to crackdown on tax avoidance and ensure corporate tax transparency.    From South American to Europe,  tax authorities are passing regulation to ensure companies provide accounting data in a standardised format, direct from their ERP applications on a monthly basis.  The tax authorities can then check the file, validate the data and ensure compliance.   Poland has introduced electronic filing with SAF-T files from the 1st July to join Portugal, Luxembourg, Austria and Lithuania who are already using the SAF-T filing format.

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Senior Account Officers say VAT is causing them most concern

Why be worried about VAT compliance when the answer is out there?

A poll conducted by one of the big 4 consultancies and outlined in their ‘SAO Toolkit‘ said that from a recent poll (no date was given so assume still recent), “over three- quarters (77%) of Senior Accounting Officers say they undertook a review of their reporting systems and nearly half (46%) of firms say VAT is the area of tax which is causing them most concern, followed by PAYE (32%), corporation tax (11%) and excise”.

With this in mind, why then do so many companies have such poorly designed VAT systems and do not invest any money in reducing the risk of non compliance around VAT?

Get in touch with us to find out how we can lead the way to achieving 100% compliance.

Oracle eBTax Exempt, Zero or Out of scope – does it make a difference

Unfortunately there is a big difference between ZERO and EXEMPT. If we were to sell everything as EXEMPT then we would not be able to recover any tax at all, if we sold everything as ZERO then we can recover 100% of the tax. Because banks sell many things as either EXEMPT or out of Scope (Exempt, Out of Scope and Zero are 3 very different rates) they can only recover a certain amount of tax, the amount could be as low as just 1%. Luckily in AP, if we accidentally put something as Zero when it should be EXEMPT then it does not matter so much.

 

Take the risks out of compliance by making your ERP work with VAT


Take the risks out of compliance by making your ERP work with VAT
There are many reasons why VAT can introduce variables into your ERP, variables that can be problematic. Something as simple as a change in the supply chain can make changes in the way VAT is handled in your company, and if your ERP doesn’t reflect this change it could lead to heavy penalties when you submit your return.

What happens when you are found to be at fault with VAT?
If you are found to be non-compliant, you are looking at heavy and punishing penalties. These penalties will have a direct impact on your bottom line. If the authorities find that your VAT is not compliant, you will have to re-invoice customers, ensuring that you pay for any debt that is missing.
The companies we know and visit use Oracle for ERP. However, they are not using it effectively for VAT management and returns. And the reason usually lies in the set-up of the tax module they have running with Oracle (eBTax). Whoever set up that module most likely configured it incorrectly, so vital aspects of VAT are managed poorly.
VAT has so many variables, especially with new policy and other aspects such as the status of a customer that it cannot be left to chance. However, some companies are still dealing with VAT manually.
 
Your configuration
Are you confident that your Oracle ERP tax solution has been correctly setup, and meets your fiscal and reporting requirements to ensure that you are fully VAT compliant?
The companies we work with have eBTax set up on Oracle. But it may have been set up incorrectly, and this poor quality configuration means that you aren’t using clear ‘tax logic’. The team that inputs your financial information through the module may be working with a poorly configured module, so that business ‘events’ like a change in supply chain details will have a negative effect.
Businesses that use Oracle and eBTax need to know if the configuration they are using is appropriate. If they don’t know this, the money spent on such a ‘solution’ could simply be a waste.
But how do you know if your configuration of eBTax is correct? How do you know if it is managing and reporting on VAT accurately?
That’s where we come in.
For more information contact us on info@ebizanswers.net or look at our website on www.ebizanswers.net