SAP BrandVoice: Re-Thinking Tax Reporting And Collection In A COVID-19 World

Re-thinking tax reporting and collection in a COVID-19 world Sponsored by @SAP

1/23/2021 11:58:00 PM

Re-thinking tax reporting and collection in a COVID-19 world Sponsored by SAP

As the world’s population locked down to prevent the spread of COVID-19, businesses have suffered.

gettyThankfully, many countries are introducing measures to support their economies amid this crisis impacting not just health but also livelihoods. And since the foundation of tax returns is revenue generation based on a thriving economy, it is inevitable that Taxes, Tax Reporting and Tax Collection need to be revisited.

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COVID-19 Reforms for Tax Reporting and ExtrapolationsThere are various ways through which Governments across the world are offering tax relief to tackle the problem of liquidity for businesses. For example, Germany reduced VAT rates from 19% to 16%; Greece from 24% to 6% for medical products; Turkey from 18% to 1% for domestic air transportation; Norway from 12% to 8% for touristic services. Many other VAT exemptions, Tax Return filing extensions and tax incentives are short termed so that governments can help businesses become resilient in the current situation.

However, some of these measures can also be extended beyond the pandemic on account of long-term benefits. Companies can gain quicker access to tax refunds if they switch to monthly GST or VAT reporting from a quarterly reporting cycle. More authorities have started allowing this switch due to the pandemic. This paves the way for the future, where reporting cycles could become shorter and more flexible as per both tax authority and taxpayers’ needs.

The Global Digital Tax Project is also gaining traction because the pace at which economies are becoming digital has increased exponentially during COVID-19. While tech companies are profiting worldwide because of being digital, not booking taxable income where customers are located has become a huge concern.

The Role of TechnologySome say that the pandemic has been a technological equalizer of sorts. Many measures which authorities have implemented, like faster tax refunds or flexible filing cycles, is because countries are going digital. Both authorities and taxpayers have access to technology, which enables them to be more agile.

On the one hand, legal reforms are introduced to benefit the taxpayers but on the other hand, they also need to adapt their legal declarations to comply with changes. Manual declarations could soon be rendered irrelevant because of lockdowns.What increases the complexity further is the “new normal” where collaboration-friendly offices have been taken over by isolated home offices. Front office employees had been used to their workspaces for decades. In response, corporations need a legal reporting solution that:

Auto adapts with changing tax rates and exemptionsProvides flexibility in switching reporting cyclesManages due date extensionsHas homogenous, intuitive user interface across reports globallyProvides seamless e-filing, including follow-up communications, like clarifications

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Eliminates manual efforts for reconciliationEmbeds analytics and provides insightsEmbeds virtual collaboration and workflowsIn many ways, the pandemic has created an opportunity to re-think tax reporting and collection. Eventually, new adopters of technology that supports changing tax incentives should not face a drop in productivity, but instead be more productive as they get accustomed to the new technology. Perhaps Einstein said it best: “The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”

Read more: Forbes »

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