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Indirect taxation is moving in a digital direction

The world of indirect tax is changing, and businesses of all shapes and sizes need to keep their eyes on the ball if they are to remain compliant

Avalara’s Virtual Inspire Conference on October 20-21 will explore this issue in depth – outlining the challenges holding back businesses from growing their exporting presence, and what sellers can do to overcome the blockers.

As a taster ahead of the event, here are a few key trends all businesses need to be aware of:

The landscape is becoming more complex

Brexit has brought a set of nuances to UK businesses doing trade within the EU trading bloc (and vice versa), while the European Union itself has just implemented a new VAT regime that removes the minimum taxable value threshold on goods and services sold.

Companies need to be ready for this, and any other increases in taxation that governing authorities introduce as they look to recover revenues after the economic hardships caused by the pandemic.

The digital drive

The second, and most significant, is the transition to tech-driven taxation which is starting to gather some serious momentum.

We have seen how the pandemic has accelerated adoption of digital ways of working across the board, and indirect taxation is now also heading in a digital direction, especially in regard to making better use of data.

In the UK, HMRC is beginning to take steps towards fully implementing a digital tax regime having signalled its intent to use more datasets in the future. In Spain, authorities are already leveraging data to link companies’ incoming and outgoing tax figures, using this information to determine whether VAT repayments are required.

Whether trading in the UK or looking to expand across borders, companies need to be prepared for this wave of technology adoption.

Some authorities will mandate certain ways of conducting tax affairs and sharing information, while automation and e-invoicing are trends that are growing in prominence.

The rise of the tax technologist

So, what does this added complexity mean for businesses moving forwards?

Organisations are recognising the need for specialist resource to respond to these changes and are increasingly creating more specialist tax tech roles – dubbed “tax technologists”. These are people with a special range of skills, able to understand the tax regulation world whilst also being able to understand how to use technology better.

With budgets squeezed and companies having to do more with less, the business case for investing in technology and digital skills is becoming impossible to ignore. As the world of indirect taxation becomes more complex and technology-driven, this ability to easily access expert knowledge will be crucial.

To find out more about the leading trends in indirect taxation from leaders at the likes of AB inBev, Grant Thornton, and Electrolux, sign up to Avalara’s Virtual Inspire 2021 event on 20-21 October.


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