Type To Search

Type To Search

CONTACT US

Type To Search

Author: GJE
Home GJE Page 2
09 AprNewsVAT

How automation can support cross-border growth

by GJE

In a $1 trillion dollar market, shipping cross-border requires three crucial elements for successful growth:

  • Effectively managing transactions
  • Compliance
  • Customer delight

While the growth rate of cross-border trade is expected to outpace ecommerce twice over, making sure all three are aligned is one of the biggest pain points facing ambitious businesses today.

Speaking at eTail Germany, one of Europe’s largest conferences dedicated to businesses seeking global expansion, Patrick Frith, Director of Cross-border Global Trade, Avalara said: “For any business thinking about selling anywhere in the world, the single biggest headache they face is how they can move their products from one place to another in a way that keeps them compliant with the financial obligations of each market. It’s no surprise that despite the desire to grow, the complexities of international expansion can cause a lot of uncertainty.”.

A surge of changes across the global compliance sector has seen a seismic shift in new compliance codes and reporting requirements. One notably is the update to the Harmonised System (HS) tariff codes which came into play at the start of 2022 resulting in the removal of 870 codes and an addition of 940. Country specific, HS Codes are a system to classify globally traded products. Used to calculate customs duty, each country has a unique code for the same product – so getting it wrong will impact your business and your bottom line.

Frith continues: “Given the growth rate of the market, if you’re not already shipping internationally, now is the time to consider cross-border trade. The opportunity for expansion is enormous. If the notion of navigating some of these known challenges feels overwhelming, please be assured that there are solutions to help. Technology has developed enormously over the last decade – utilised by thousands of businesses across the globe, it’s a proven means to help navigate around potential pitfalls – meaning you can keep focused on growing your business.”.

Partners can provide you with real-time calculations, support, and advice on everything you need to keep your goods moving across the globe.

If you’re ready to find out more, contact us to speak to one of our experts for a no-obligation discussion on how we can help.

Read More
06 AprNewsSales Tax

Doing business in the USA

by GJE



Ecommerce continues growing by leaps and bounds and now accounts for 15% of all retail sales in the US. Last year alone, US consumers spent $870 billion online.

However, as with all cross-border sales, selling into the US is not without its complexity. Sales tax compliance is key and navigating the ins and outs of sales tax is complex for even the savviest business owner. Failing to comply puts your business at high risk for audit, penalties, and you could even face fraud charges. If you get sales tax right, you’ll reap the rewards and potential profits of selling into this booming online retail market.

To support those ready to grow, here at Avalara, we are proud to announce a partnership with Blue Link Worldwide, to provide specialist tax advisory support for their upcoming webinar series: ‘Doing Business in the USA’.

Blue Link Worldwide, an independent business advisory firm offering support for organisations seeking to operate across the US, offers a range of services and support for those seeking to enter the US market. 

With sessions taking place between March and June 2022, whether you’re thinking of starting, developing, or already doing business in the USA, this event is essential viewing. With experts on cross-border and sales tax on hand, you’ll come away with practical learnings to help you increase your customerbase, drive revenue, and position your brand for the future.

The first session in partnership with the Department of International Trade was live on March 24th 2022 you can playback the conversation in full here. 

So, if you’re a business with dreams of significant growth or an established brand seeking to progress further, now is the time to be thinking about the American ecommerce dream.

Read More
02 AprNewsWorldwide

VAT compliance Key Performance Indicators – what is best practice?

by GJE

Whether you prepare VAT returns in-house, outsource indirect tax returns to a third party, or use a shared service centre or centre of excellence, how do you assess performance and what success looks like? It is certainly best practice to set Key Performance Indicators (KPIs) in relation to indirect tax compliance. While these can be localised at a country or regional level, it is recommended that KPIs are scalable to have a consistent policy and for benchmarking and ease of comparison, as well as to identify best practice or flag common areas of risk. 

Key performance indicators in relation to tax can help measure the company’s or a specific team’s performance against established goals, which can be set in alignment with broader organisational goals approved by management and the VP/C-Suite level that oversees finance, accounting and tax risk management.  

Examples of KPIs that we see businesses adopting include: 

  • % of VAT returns submitted on time
  • % of VAT payments made on time
  • VAT returns are accurate (using exception reporting to assess this)
  • VAT return numbers reconcile to the General Ledger (GL), with variances explained
  • implement strategies to reduce tax process costs 
  • post VAT to purchase ledger with relevant tax code within 5 days of receiving invoice
  • report all VAT return/GL discrepancies at least 72 hours before submission.

Some of these success metrics are easy to measure and relatively straightforward to quantify e.g.

  • penalties raised by tax authorities
  • interest on late payments or assessed tax
  • date of submission of returns (evidenced by filing receipt).

Other metrics may require more sophisticated data analytics and exception reporting to identify possible discrepancies, errors, and incorrect tax calculations.  Some examples of checks on VAT data that businesses can carry out as part of the VAT or GST return preparation process (for example using an automated VAT return compliance solution like Avalara’s VAT Reporting) include:

  • duplicate supplier invoice number
  • unacceptable exchange rate 
  • invalid customer or supplier VAT registration number
  • output VAT is greater than expected 
  • input VAT is less than expected
  • VAT has been charged in error based on customer location.

As the direction of travel for VAT compliance is clear – it is the digital submission of transactional data in real time to the tax authority (via e-invoicing and e-reporting), the importance of getting the VAT calculation and reporting correct first time becomes even more important. Tax authorities will be able to run their own analytics, exception reporting and even AI and machine learning over complete datasets, not only identifying errors and discrepancies requiring further analysis, investigation or audit, but also gaining insights that can be used across different taxes and areas of risk e.g. customs duty, corporate income tax and transfer pricing. Businesses should act now to future-proof their indirect tax function and consider how technology can automate VAT processes and reduce risk.

Speak to an VAT expert now to see how we can assist with VAT calculation, VAT reporting and e-invoicing.

 
Read More
23 MarNewsWorldwide

Expanding to the US and beyond: don’t let tax hold you back

by GJE



With business expansion front of mind for thousands of retailers, help is on hand for business leaders seeking to navigate through the world of tax compliance.

At this year’s Moonova, one of the largest marketing and digital commerce events for decision-makers across marketing, sales and product, attendees heard from Avalara’s Technology Solutions Manager EMEA, Dr. Florian Spendlingwimmer. Invited to lift the lid on the challenges DACH-based businesses are facing when considering expansion, Dr. Spendlingwimmer highlighted three key areas which require attention for ambitious business:

  1. Navigating through and understanding where the business has tax obligations
  2. The method and means by which you are required collect tax and submit tax payments in each market
  3. How to identify the correct tax rates when selling internationally. 

Consider New Markets Carefully

At a time where change is constant, during the presentation, Dr. Spendlingwinner commented: “Since the introduction of the One-Stop-Shop in Europe, there is a smaller threshold for businesses selling across the region. Set at just €10,000 it impacts nearly every merchant. Online marketplaces, although a great way to enter and test a market, are now subject to increased regulation and careful consideration needs to be given to the channels which you plan to sell through”.

Dr. Spendlingwinner continues: “When you’re ready to expand internationally, you need to carefully consider what channels you want to expand into.

“In the example of a German businesses seeking to expand further afield, the natural first step might be to enter the Austrian market. This progression is made easier by the fact that there’s no need to translate your checkout or your website. This can be a good way of testing your expansion plans and building your understanding of tax requirements and compliance. However, where the complexity comes in, is when there is desire to expand further afield – into the United States for example. Business might understandably assume that having expanded into one market successfully, the route to entry will be similar. Unfortunately, it’s not the case. In fact, it becomes even more complex!”

Since the start of 2022 the industry has seen a raft of changes come in which have drastically changed the landscape. From updated HS codes through to new tax justifications in the US – staying on top of your obligations requires constant monitoring. For European suppliers selling into America, there may be a scenario where your business has stock across multiple states. With around 14,000 tax justifications on the continent alone, you’re likely to need some support navigating your way.

Understanding what might trigger new tax obligations for your business from the outset and staying up to date with the ever developing compliance sector is imperative to continued success.

Prepare for Change

If you’re a DACH-based business keen to expand into new markets or are scaling up operations, Dr. Spendlingwimmer’s presentation is available to playback (recording in German).

In addition – check out Avalara’s Tax Live blog, an up-to-date resource available to readers to help keep updated with upcoming changes. Our specialists have unparalleled knowledge and expertise in all aspects of tax compliance, wherever your business is based. From helping you understand your tax obligations through to automatic tax returns, we can help you grow.

If you’re ready to take the next step and want to take the complexity out of compliance, get in touch with us for a no obligation call. 

Read More
23 MarNewsWorldwide

Futureproof your business with e-invoicing

by GJE



Driven by emerging digital frontiers and globalisation, governments are increasingly leveraging technology to reinforce their indirect tax collection. The most recent tool in their armoury is e-invoicing.

If you’re immersed in the professional finance world, you may be aware that governments worldwide are rolling out e-invoicing mandates. While it makes sense for tax authorities to enhance their processes with technology, the varying national requirements make compliance more challenging for businesses.

In this article, we’ve taken insights from our latest e-book: The Rise of E-invoicing – The Direction of Travel, to explore the recent explosion of e-invoicing mandates and explain why companies must move now to reap the benefits of an upgraded invoicing process.

Back to basics: The definition of e-invoicing

E-invoicing is defined as the digital transformation of manual invoicing practices. The process eliminates the need for paper-based invoice documents by replacing them with electronic alternatives.

At a glance, PDF invoices may seem like e-invoices in that they are electronic documents. However, simply generating PDFs, emailing them to the recipient and processing them still requires human intervention. In contrast, e-invoicing involves automating processes across the entire invoicing lifecycle, from issuance to archiving. Governments and tax authorities are generally mandating specific e-invoice formats as well as specific e-invoicing platforms to be used.

Increasingly, businesses worldwide recognise the advantages of streamlined e-invoicing processes. Not only does e-invoicing ensure accuracy by removing the risk of human error, but it also helps to expedite time-consuming, tedious tasks for finance teams and boost efficiency.

Strategic and global versus tactical and local

The growing trend of e-invoicing mandates has been clear for several years now. In 2021, the global e-invoicing market reached a value of US$ 8.74 billion. Looking ahead, the IMARC Group expects the market to reach a staggering US$ 29.68 billion by 2027.

The astonishing growth trajectory can be attributed to the increase in finance automation, government initiatives and the globalisation of the digital economy – none of which are going away any time soon.

Indeed, it’s almost like businesses are playing “whack-a-mole” – It seems like every week there’s a new mandate in a new country, or a change to an existing e-invoicing and digital reporting requirement. Businesses suddenly need to get to grips with these new and emerging requirements, asking themselves “What is this mandate, how does this affect me, does it affect resident businesses, or non-resident businesses? Is it B2G, B2B, B2C? Classifying customers and revenue streams and waiting on the local detail”.

The direction of travel is clear, e-invoicing is spreading across the globe and businesses need to think more in terms of global and scalable – finding a solution and process that not only meets the requirements of today, but also one which meets the roadmap of requirements that are going to be introduced. It’s not so much just where businesses are today, but rather which markets businesses will be operating in tomorrow. It’s about moving away from tactical, local solutions to a more strategic global solution – a single scalable e-invoicing and digital reporting platform that is compliant across multiple jurisdictions – one that will flex and scale as the business grows, and indeed as the mandates grow.

Why act now?

There’s no more time to waste when it comes to e-invoicing. Businesses need to be proactive to stay compliant with future e-invoicing mandates and remain competitive in a complex, digital-first market.

Getting ahead of the curve and advancing finance functions through technology will also enable businesses to reap the benefits of invoice automation. Below, we’ve highlighted just some of the benefits of adopting e-invoicing now:

Finance Automation

Automation of the invoicing process opens up a world of opportunity for Accounts Payable (AP) and Accounts Receivable (AR) staff by transforming their roles from data entry clerks into business analysts. By eliminating tedious, paper-intensive processes, employees in finance departments get the opportunity to work on added-value tasks, leveraging data for business analysis and smarter business decisions.

The effective automation of finance processes also slashes departmental costs, making e-invoicing a much more affordable option compared to paper invoices. With paper invoicing, businesses need to budget for the direct costs of the materials, printing and delivery, plus indirect costs related to the time and labour sunk into manual processing.

In fact, a report by Billentis estimates that automated e-invoicing will result in huge savings of around 60-80% compared to conventional paper invoice processing. Additionally, by removing the need for human intervention, e-invoicing ensures data integrity, freeing up a significant portion of time that AP teams would otherwise spend rectifying data errors.

Compliance

Tax authorities all over the world might be on the same page when it comes to the perceived need for e-invoicing and tax digitalisation. However, compliance is never uniform. Each tax authority has its own independent requirements, deadlines, platforms… the list goes on.

The complex international landscape poses a significant challenge for global businesses, which must abide by each country’s e-invoicing and tax regulations. Failing to do so could result in hefty fines and disruptive audits. For instance, to ensure invoices are reported correctly, the Italian government has set penalties of €2 for each invoice not submitted to the SDI, up to a maximum of €400 per day.

A robust e-invoicing solution can continuously adapt to compliance changes. It will generate accurate invoices, issue them within the correct deadlines and ensure that they are submitted through the correct platform so that finance functions can rest assured of their business’ full compliance.

Sustainability

It can be easy to overlook the back-end running of a company when it comes to implementing eco-friendly initiatives. However, finance departments are a haven for paper-intensive processes that directly affect deforestation rates. E-invoicing gives companies a simple yet powerful way of contributing to their environmental, social and corporate governance (ESG) targets and reducing their carbon footprint.

Depending on the business size (and the number of invoices issued), companies adopting e-invoicing gain the economic advantages of an automated finance system while significantly reducing their paper waste and carbon footprint. Achieving a more eco-friendly back-office will also work in the company’s favour by catering to the eco-conscious stakeholders, employees and customers they target.

The Rise of E-invoicing – The Direction of Travel

Being proactive and adopting e-invoicing can save you compliance headaches down the road while incorporating time-saving automation into your finance department.

However, we understand that the e-invoicing landscape can be difficult to navigate. That’s why we’ve gathered our expert knowledge into an e-book and webinar to give you insights into the e-invoicing trends that so many countries are embracing.

Read More
23 MarNewsWorldwide

Top 4 global VAT/GST pitfalls and registration triggers

by GJE

The concept of “nexus” is still evolving globally, and indirect tax registration thresholds are being lowered. We’ve set out the top four scenarios that are likely to cause a VAT issue and trigger a l…Continued

(Feed generated with FetchRSS)

Read More
23 MarNewsWorldwide

Insurance tax is going digital

by GJE

Find out what’s driving the digitalisation of insurance and its impact on insurance tax compliance. Download our guide for core insights into the industry….Continued

(Feed generated with FetchRSS)

Read More
23 MarNewsWorldwide

Top 10 tax invoicing issues and pitfalls

by GJE

We have set out our top ten tax invoicing pitfalls to be aware of if you do business internationally….Continued

(Feed generated with FetchRSS)

Read More
19 MarNewsVAT

Moving towards a common e-invoicing standard in Europe?

by GJE

https://horizonsolutions.biz/contacts/

More and more countries globally are implementing mandatory e-invoicing or digital reporting requirements. The requirements differ significantly between countries, with different standards and formats, diverse data fields required, as well as different processes relating to how the invoice and its data are shared with tax authorities and received by customers. In the European Union (EU), the first country that mandated e-invoicing for B2B transactions was Italy in 2019. However, the majority of EU countries are now moving forward with implementing mandatory e-invoicing, either for B2G or for B2B supplies, with some launching pilot programs and others bringing in new legislation to bring in e-invoicing in the next 12 – 24 months.

Diverse reporting requirements but clear direction of travel

In addition to e-invoicing, there are several distinct types of digital near-real time reporting including SAF-T (Standard Audit File for Tax) which is an digital tax audit file that needs to be submitted covered all transactional data (this can be monthly, quarterly or annual), real time data submission (submitting invoice level detail to the tax authority either on the same day or within a few days), through to fiscalisation of retail sales (where mandated government software must be used with point of sales solutions including cash registers to record sales and transmit data direct to the tax authority). Despite the different formats and types of VAT digital compliance filings, the direction of travel for indirect tax is clear – it is digital and real time reporting of transactions and governments are increasingly mandating e-invoicing as the method of obtaining this transactional-level data. The number of countries with e-invoicing mandates across the globe continues to grow every month, and we have now reached a major turning point and critical mass in Europe, as both France and Spain have announced mandatory e-invoicing from 2024 (and it is expected that Germany will follow soon).

VAT in the Digital Age

The European Commission’s “VAT in the Digital Age” initiative (and subject of a current public consultation) is looking at increasing the use of e-invoicing across the EU as well as looking to move towards a more harmonised set of requirements for e-invoicing and cross-border digital reporting. The policy options being considered include:

  • A more widespread adoption of digital reporting and e-invoicing requirements across EU
  • Fostering the adoption of digital reporting requirements that optimise the use of digital technologies
  • Reducing the fragmentation of digital reporting requirements 
  • Issuing a non-binding recommendation providing a common design for reporting obligations across the EU
  • EU member states no longer having to request an explicit derogation for introducing mandatory e-invoicing for B2B transactions
  • The introduction of partial (limited to cross-border transactions) digital reporting and e-invoicing requirements
  • The introduction of fully harmonised (covering domestic and cross-border transactions) digital reporting and e-invoicing requirements
  • Requiring taxpayers to record data about their VAT transactions in a standard pre-determined digital format, which tax authorities can access upon request.
 
 

While it may be difficult to reach consensus on a single standard for e-invoicing, the real impetus for change and conformity may instead come from collaboration between the countries themselves rather than through legislation or guidance from Brussels. A great example of this is the new version of the French-German e-invoicing standard that has just been released – the Factur-X / ZUGFeRD. This standard has been developed through cooperation between France’s National Forum for Electronic Invoices and Electronic Public Contracts (FNFE-MPE) and Germany’s Forum elektronische Rechnung Deutschland (FeRD). 

Could this be the blueprint for a harmonised European e-invoice standard? 

Factur-X / ZUGFeRD – the French-German standard

The new versions of Factur-X 1.0.06 and ZUGFeRD 2.2 are technically identical e-invoice formats that can be used in both Germany and France, meeting local requirements in each country (for example the German Core Invoice User Specification (CIUS) “XRechnung” in Germany). In addition, the technical specifications for Factur-X / ZUGFeRD are based on international standards that guarantee interoperability and regulatory compliance (i.e. meeting global and scalable policies, standards and guidelines that enable the exchange of e-invoices across multiple systems, borders and national platforms) including:

  • The UN/ CEFACT SCRDM Cross Industry Invoice (CII)
  • The ISO PDF/A-3 standard
  • The European semantic standard EN 16931 (which specifies technical standards and rules for e-invoicing in Europe). 

With one eye on the upcoming French e-invoicing mandate, the Factur-X / ZUGFeRD format is also compatible with the French national e-invoicing platform, ChorusPro, which will be scaled for mandatory B2B e-invoicing and e-reporting for the mandate starting in 2024. The other interesting feature of the Factur-X / ZUGFeRD is that it is a hybrid document that combines both a human readable PDF with machine readable XML language. One of the challenges to businesses is that mandated digital reporting is often a parallel process to issuing invoices to customers and the VAT return that is completed and submitted to a tax authority. 

This not only involves duplication of time, effort and data, but also leads to additional complexities in relation to data reconciliation between returns and reporting. Under Factur-X / ZUGFeRD, the hybrid document that is delivered to a customer can be the same that is sent to the tax authority. This is a real game changer for e-invoicing and a step further than Hungary’s recent 3.0 XML schema which aimed to combine the e-invoice document that is sent to the customer and the data that is required to be sent to the tax authority. In addition, the new version of Factur-X / ZUGFeRD includes a standard library of additional invoice data that might be needed for specific business needs or use cases, including incorporating “Order-X” which involves additional business data to allow electronic exchange of purchase orders and payment details to fully digitalise and automate the Procure-to-pay (P2P) process.

 
 
 
 

Use of transactional data by tax authorities

As well as this shift towards a single scalable invoicing and reporting process by national Governments, tax authorities and national e-invoicing forums, we are also seeing this trend driven from businesses themselves. Historically, many businesses wanted a quick local tactical solution to comply with new digital reporting requirements in Europe, for example, licensing a solution from a local software vendor or even simply outsourcing the digital reporting of data to a third-party compliance provider. However, given the number of e-invoicing and digital reporting mandates in place or confirmed on the roadmap, tax and finance leaders are now looking at this strategically and holistically, looking to select and implement a global and scalable e-invoicing solution, as well as digitally transform how they interact with their customers and suppliers.

Whatever the future holds in terms of common standards and how Governments and tax authorities receive and ingest the tax and transactional data, it is clear that they are certainly getting savvier with data and technology and following their own finance transformation projects and digitalization journeys, are starting to run more detailed exemption reporting, analytics, and even AI on the larger data sets that they are receiving. This is used to spot tax errors (in real time under a pre-clearance model, or during an audit), as well as to highlight and profile higher risk taxpayers in relation to errors, omissions and fraud. Tax authorities are also starting to use the data they are receiving through e-invoicing and digital reporting to pre-populate VAT returns (e.g. the Annual VAT return in Spain produced by the tax authority based on the transactional data submitted under the SII). It is anticipated that the preparation of the VAT return as we know it will disappear, and taxpayers will review, edit and augment VAT returns pre-prepared by the tax authority.

Get in touch now and speak to one of our indirect tax experts to see how we can assist with e-invoicing and digital reporting. 

Read More
18 FebNewsSales Tax

US Missouri to tax foreign sales and marketplaces

by GJE

The US state of Missouri is to become the last state operating a sales tax regime to impose taxing obligations on foreign, ‘out-of-state’ sellers and marketplaces, from January 1, 2023….Continued

(Feed generated with FetchRSS)

Read More