Changes in business structure, supply-chains, tax legislation and policy must all be reflected in the ERP system. The VAT impact of these changes cannot be overlooked and must be configured accurately in the ERP system and consistently maintained.
As tax administrations focus more on ERP systems and controls, active VAT risk management in this area is critical to avoid serious compliance risks.
VAT compliance risk in the ERP system can be brought about by:
New business structures
Policy changes by tax administrations
Legislation changes at jurisdiction or Community level
Growth through mergers and acquisitions
Changes in logistics flows
Systemic errors occurring and growing over time
ERP migrations or implementations
VAT is a transaction-based tax, inextricably linked to the day-to-day operations of your organisation. Accordingly, VAT determination logic and reporting processes are core functions of the ERP system, which must be optimally configured and maintained to ensure efficient and accurate results.
Incorrect or misaligned ERP configuration, in response to business changes, will lead to serious compliance risk.
“Do you feel that your ERP team fully understands your fiscal requirements and has translated them correctly into your ERP system so that you are fully VAT compliant?”
We recommend a focused review of your VAT configuration in your ERP system, undertaken by a team of international VAT and ERP systems experts. This review will assist tax and finance directors achieve quick and clear visibility of where systemic VAT compliance risk lies and provide practical solutions on how to address these risks.