Making Tax Digital

The Digitisation of Tax, or Making Tax Digital, is an initiative being introduced by many governments around the world, with a message that change is designed to make it easier for both individuals and businesses to get tax right and keep on top of their affairs. The backdrop – each year, the world’s economies are losing billions to tax avoidance and taxation errors. A recent report by the International Monetary Fund (IMF) reported it as an estimated $600 billion loss.

In 2003, the European Union (EU) introduced legislation to tax the digital exchange of value. The resulting taxation required non-EU headquartered businesses that provide digital services to consumers in EU member states to register in the VAT system and to charge VAT based on customer location.

Why does my organisation need to care?

Organisations will need to identify vendors and solutions that can support them as local, regional and global tax administration changes introduce an array of new challenges.

Did you know?

The Digital 9, or D9, is a network of the world’s most advanced digital nations. The founding nations (the original D5) were Estonia, Israel, New Zealand, South Korea and the United Kingdom. They later became the D7 with Canada and Uruguay joining in 2018. By the end of 2018 Mexico and Portugal had joined to make up the current D9. The original charter can be found here.

Supporting Tax Digitisation

As the topic of Making Tax Digital has grown over recent years, Winterhawk has supported clients via a range of consulting services and solution deployments:

SAP Tax Compliance – Detection and investigation of tax issues, reducing compliance issues by automatically screening your transactions for potential tax abnormalities. Use it to rapidly calculate tax liabilities and ensure compliance for indirect taxes such as sales tax, VAT, goods and services tax (GST).

SAP Business Integrity Screening – Learning algorithms to identify tax inaccuracies, anomalous tax, automated detection of compliance issues, automate the sign-off of tax and VAT records and only highlight the records that do not comply, look suspicious or are inaccurate. These are then sent to an incident management system for an internal employee to review and remediate issues.

SAP Process Control – Implement, monitor and ensure that tax-related operational controls are working effectively in the organisation. Any tax-related control that isn’t working would be flagged quickly and an owner would begin the process of remediating. Also, Process Control helps to monitor compliance with specific tax regulations, highlighting when and how the organisation is non-compliant with specific regulations.

SAP Audit Management – Plan, create and execute audits against tax operations and processes, bringing in specific tax record data and the control framework to follow up on how the organisation is managing tax compliance. Audit can raise issues and recommendations for the organisation to address by improving the processes, controls and tax submissions.