Governments Adopt Cloud-Managed Services
Now with the increasing availability of digital technology, government entities have increasingly adopted cloud-managed services to enhance the efficiency, effectiveness, increase tax revenue and optimize additional services to companies. These services, known as #CTC, allow tax agencies to collect data in real time or near-real time, associated with the businesses activities that are crucial to their operations.
CTCs Ensure Financial Data Integrity
With the increasing availability of digital technology, government entities have increasingly adopted cloud-managed services to enhance efficiency, effectiveness, increase tax revenue, and optimize services to companies. These services, known as #CTC, allow tax agencies to collect data in real time or near-real time, associated with business activities crucial to their operations.
Rapid Growth of CTC-Based Tax Systems
Governments are increasingly recognizing the benefits of implementing rigorous control measures, such as Continuous Transaction Controls (CTCs), to enhance tax management. It is anticipated that the adoption of CTC-based indirect tax systems will significantly accelerate in the next five to ten years, with a majority of countries implementing these controls fully or partially for taxes like VAT, GST, or similar indirect taxes by 2030.
E-Invoicing Success: Brazil and Peru
Here are a few examples highlighting the advantages of implementing e-invoicing. In Brazil, tax evasion decreased significantly. For example, in São Paulo, there was a 9.7% increase in ICMS revenues from 2007 to 2011. Additionally, a study conducted by the #IMF on the implementation of #electronicinvoicing in Peru indicated a 5% to 7% increase in reported taxable sales and purchases during the first year. The study noted that this impact continued to grow over time, starting from the mandatory adoption date of the new mandate.
"VAT in the Digital Age" (VIDA) Reforms
On December 8, 2022, the European Commission announced a significant change called “VAT in the Digital Age” (#VIDA). This mandates that all businesses use electronic invoices for selling goods or services to other #EUcountries. They also need to send specific invoice information to tax authorities.
EU Transaction Reporting Standards by 2028
#EUmemberstates seeking to implement transaction reporting requirements for domestic sales must ensure compliance with these reforms for cross-border sales. For member states already having transaction reporting requirements, they will need to adjust to the new EU standard by 2028.
