To understand why there is an ongoing evolution in the managing and administration of value added taxes (VAT), it is important to first understand the motivations of the governments behind the changes. The primary responsibility of any tax authority is to collect the revenue in which the government is legally owed. The difference between what is owed and what is collected is referred to as the tax gap and these can represent serious shortfalls in revenues for countries looking to fund critical programs. For example, according to the European Union Economic Commission, the estimated tax gap for the EU in 2018 was 140 billion pounds, or 11% of total revenue.
When you understand the stakes, it’s easier to understand why governments all over the world have embraced digitization and other new technologies to better track and collect revenue that they are legally entitled to. Creating a clearer picture of the new VAT landscape was the primary motivation behind we here at Sovos working with IDC to create a new report titled: Taming the Value-Added Tax Beast with Technology. You can download your free copy here.
Source: SOVOS
