The future of vat exchange summit bcn 10 oct-2016_jfs_v2

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The future of VAT in a platformized world

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“2016 the year the e-invoice talks back.”

InCoPro: Design for Margin (D4M)A guide for the digitalization of your Financial Supply Chain and Supply Chain Finance

Compliance as a Service

Compl-aaS


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Margin

A digitalization guide foryour Financial Supply ChainPowered by InCoPro bvba

Platformization in Business processes

The Future of VAT the impact of the network economy:

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Digitalisation should focus on the process, not the technology

The digitalization of financial supply chain was driven by technology providers for far too long.

People

Network

Tools

Process

Collaborativenetworks

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Its all about the end to end processes

Payment

Collectionshipping

Receipt

sales

Purchase

An invoice automation solution can only be really effective, when the data of all documents relating to the invoice can be linked.

But we focus too much on the process of corporate (1%) and too little on those of the SMEs (8%) and micro-enterprises <10 FTE (91%).

Do we really need two process? Will they stay?From Q2C + S2P => S2C Platforms and Blockchain encourage it

Quotation to CashSourcing to PaySourcing to Cash


“Platformization” can bring transparencies through the whole administrative flow.

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The impact of the EU vat-action plan

The EU Action plan is focusing on making third party service providers liable for the transaction they support.

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European Commission publishes VAT action plan 7 April 2016


European Commission publishes VAT action plan 7 April 2016

Point2: Investigate the possibility of extending the use of automated access to data. It will also explore with Member States the possibility to develop an automated mechanism that would allow a cross-matching between the data reported by each party of every single transaction. That would allow detecting fraud in early stages and ultimately prevent a missing trader fraud, be it domestic or intra-Community; Point6: VAT fraud in the electronic commerce sector and new businessesOn the one hand, fraudsters exploit emerging technologies and new

business models to avoid the payment of VAT. On the other hand, legal and technological tools and policies at the disposal of tax administrations to combat fraud and evasion are lagging behind and insufficient to address the emerging risks. The Commission will work on a set of specific compliance measures including antifraud tools for tax administrations, on a communication campaign addressed to companies and citizens and on proposals for third parties involved to supply targeted information to tax administrations in order to allow the latter to cope with the new digital economy business model

Source:http://ec.europa.eu/taxation_customs/resources/documents/taxation/tax_cooperation/vat_gap/2016-03_20_measures_en.pdf


OECD propose to fight the VAT erosion with New Technologies: big data, Blockchain etc.

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• In May 2016, the OECD published a report, Technologies for Better Tax Administration, which explored how emerging technologies could be best used by tax administrations. Blockchain could be one of the most valuable technologies because of its ability to rapidly deliver high-quality, reliable information to a wide group of interested parties. It can deliver data in a format that’s interpretable and, in contrast to the way in which tax data is collected today, can look across a transaction and the tax treatments associated with it. In other words, both taxpayers and tax authorities can have equal confidence in the data that’s collected.

• For tax departments today, the scale and detail of data that is required by tax authorities is a real challenge. Front office systems are generally set up from the point of view of information that’s useful to the organisation, and not necessarily from the point of view of compliance; it’s transaction, rather than compliance-based information. Blockchain should allow you to capture information from multiple perspectives – information that’s been verified by everyone using it. The result is more detail, more useful information and more certainty.


Designfor

Margin


Why content compliance matters for platform service providers

When Content compliance’ is the heart, and ‘Form compliance’ is the surface area, what makes that services providers are not exploring the haert?

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‘Content compliance’ is the heart, ‘Form compliance’ is the surface area

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E-invoicing compliance refers to Five obligation: • accurately reflect actual supplies of goods and

services, • The content should meet the legal obligations on

mandatory fields but also the correct application of international VAT-rules (ex: exemptions, use and enjoyments, reverse charge, etc.).

• authenticity (invoice sender and receiver are known),

• the integrity of content (content is unchanged) • the legibility of invoices (human-readable) are

ensured from their issue until the end of the period of storage.

• Depending on local regulations either business controls, EDI or Digital Signatures are required to ensure compliance.

Most Service Provider and e-platforms do not active support proof of Actual supply and whether the content of the mandatory fields are respecting the international VAT-legislation and other legislative obligations on invoices (correct Rules applied).

Invoice Archive

Integrity of content

Authenticity of partners

Invoice content

Actual Supply


• Due to intense media scrutiny of the current principles of international taxation, base erosion and profit sharing (BEPS) issues have been high on the political agenda in the recent months

• Data mining is hot• VAT returns to be filed in Spain

electronically in real time 2017• Periodical SAF-T files in PT 2014• SAF-T capability in FR and Lux• DaRT capability in Germany

GoBD 2015• Ecommerce is in the focus of

the Taxmann and is complex and also important in BtoB

Why an VAT Engine and content compliance


Content compliance is the heart, Form compliance is the surface area

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Basware webinar dec2015

Why an iVAT Engine and content compliance


VAT AND NEW BUSINESS MODELS

What is the impact of the new models as E-commerce, Share-economy and crowd sourcing?

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The new school

Legal compliance:A challenge that will be put to the platforms

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Old School model: Church Tower to WorldLinear successive controlled development of international trade and compliance (blow church, town, region, country, neighbor states, rest of world)New school : Centrifugal model from world to the church or JailCentrifugal development cross all nations and full compliance complexity

The old school


e-Market Complexity: From Germany to Germany through Poland

• German merchant revolt over a new Amazon Strategy: According to information obtained by SPIEGEL ONLINE, the Group urges partners to send their goods through Eastern Europe - even if they go to customers in Germany.

• If a German company relocate goods for example, to Amazon consignation Warehouse in Poland, it must execute VAT-declarations under Polish law. This means that a German company selling goods via Amazon to a German customers, now needs Polish Tax advisors in order to handle these transactions.

• Amazon pointed out it the sellers in a letter: "Please note that due to the storage of your goods in Poland and / or the Czech Republic a VAT registration in these countries is necessary. You are responsible for this application and to be compliant with the fiscal conditions. "The invoice with the valid local VAT rate is strictly observed."


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Margin


All governments are looking to getting involved in the transactions

The governmental recipe to fight the VAT-GAP• Data Mining• Platformisation• Blockchain

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VAT returns to be filed in Spain electronically in real time

What does the Immediate Information Sharing system consist of ?The so-called IIS (SII) is a VAT (Value Added Tax) management platform, based on the real-time reporting of company business transactions. Every time a company issues or receives an invoice, they must send the information to the Tax Office within a maximum of 4 working days.These invoice details will be provided in the form of VAT record books, which contain the essential information on the invoices and can be managed through the electronic systems and solutions linked to the Tax Agency platform.With the new system it will be possible to manage VAT electronically, streamlining tax compliance and cutting indirect costs, as with SII/ISS (Immediate Information Sharing) declaring the tax withheld on each invoice can be automated and take place at the same time as an invoice is recorded, doing away with the need for additional counting tasks currently required to comply with these obligations.In addition, it increases the deadline for VAT payments by 10 days and should foreseeably speed up delivery of tax rebates. This is mainly because administrations will be able to check and validate the documents more quickly.


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HMRC could seek new powers to force online marketplaces to provide information on traders using their sites. Not our problem. Online marketplaces such as Amazon and eBay point out that online retailers are independent traders responsible for their own tax affairs and that they provide tools and information to assist sellers with their compliance. However, they don’t have the authority to review their tax affairs or force them to register, but they say they will co-operate with HMRC in any fraud investigations. EU law. However, under EU law Amazon, eBay and other online marketplaces could be held jointly liable for all unpaid VAT, along with the offending traders, if action was taken against them. If they knew that fraud was being committed they could be jointly and severally liable. They have given assurances that they will tackle any sellers that are giving false VAT numbers or don’t have their VAT number registered on the system. The legislation provides a safe harbour defence for intermediaries up until the point they become aware of that illegality.On the horizon. HMRC wants to extend its powers to collect more data on companies and individuals it suspects of tax evasion. It has also said this would apply to intermediaries such as Amazon and eBay. This means that online marketplaces could become de facto tax inspectors. It says “We are developing better intelligence around the nature and scale of suspected fraud in this area.”With up to £2 billion of VAT at stake, HMRC could seek new powers to identify online sellers that are not registered for VAT and force online marketplaces to police the rules.http://businessdatabase.indicator.co.uk/business_advice_directory/articles/hmrc_po


E-commerce businesses targeted in Denmark

• We understand that the Danish tax authority have been granted new powers to help them ensure that non-established traders pay their share of VAT due on sales in Denmark.

• The e-commerce industry is going to be specifically targeted and to this end, payment solution providers and credit card suppliers will have to provide the tax authority with details on the amounts received by remote vendors (i.e. businesses established outside of Denmark) from customers in Denmark. This will help the tax authority to identify traders who have breached the distance sales threshold in Denmark and, with this information to hand, the tax authority can pursue them more effectively if registrations and VAT have not been declared correctly.

• Whilst we have not seen any traders specifically targeted by the Danish tax authority on this basis, it does follow the recent trend of countries looking to protect their tax revenues more vigorously and also level the playing field for their established traders.

• On the assumption that the Danes will be using these new powers more extensively as the year progresses, businesses selling to customers in Denmark should review their position in order to confirm if they have any liabilities and, if they do, take action to correct their position ahead of the tax authority potentially contacting them.

9 March 2016 Rob Janering; Denmark, VAT News: www.accordancevat.com/e-commerce-businesses-targeted-denmark/


The issues of third party liability are now increasingly affecting the warehouse providers

• Taxing issues’ in Logistics Business Magazine: 3 March 2016

• Responsibilisation is becoming more common in the EU, and the issues of third party liability are now increasingly affecting the warehouse providers.

• In the very recent past the German tax authority has asked Amazon for details of its FBA and e-commerce clients

• whilst the Netherlands has already attempted to sue a warehouse keeper for millions of euros of VAT left unpaid by a client.

• http://logisticsbusiness.com/magazine/digital/2016_03/#/26/zoomed


Portugal: SAF-T and Invoice Gamification


• Wiebe The Dutch State Secretary Finance presented 23th April 2016 a system where data are exchanged between countries on international transactions. Based on a technical analysis of these data, the fraud can be detected much faster. "Not within months, but within a few days,".

Dutch Governement approach VAT fraud with New Technologies: big data, Blockchain etc.

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Poland:Digitalization of VAT-Complinace

Starting from 1 July 2016, SAF-T will be implemented for "large" taxpayers. For the other taxpayers "medium, small and micro", it will become mandatory as from I July 2018. The definition of a "large" taxpayer has been further clarified. In scope are companies having either more than 250 employees or exceeding EUR 50m of net turnover and EUR 43m of assets (in at least one of the 2 preceding fiscal years).

"Large" taxpayers will be obliged to provide the tax authorities upon their demand all their books in a specifically determined electronic format i.e. via structured XML files named JPK — "Jednolity Plik Kontrolny". These xml files were published by the Ministry of Finance on March 9 and are 7 separate files corresponding to seven different areas.


Lithuania plans to mandate enhanced electronic reporting from October 2016 i.MAS

The Lithuanian State Tax Inspectorate is implementing the smart tax administration system i.MAS. The inspiration for this project came from Portugal. The objectives are to reduce the administrative burden for taxpayers, improve the efficiency of tax administration and increase tax revenue by reducing the shadow economy.The subject of this obligation will be the monthly reporting of invoice data (issued and received) and a system to facilitate the issuing, transfer and use of electronic waybills for land transportation in real-time. The exact file specifications shall be prepared and approved by April 2016.


Germany: DaRT:Data Retention Tool"(DaRT)


Germany: DaRT: extensive tax-relevant data extraction, Line Item based ready for analytics


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Margin


Content compliance is only a fingertip away from service providers

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Nick Castellina, Research Director, Business Planning & Execution at Aberdeen Group at an Avalara Webinar 2016


The Holy trinity of content compliance of invoices

ProductService

classification

VAT status of partners

PlatformInvoicing Content

compliance

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The logistic

scenario

[email protected]


GS1 GLNs are a key concept in EDI. They provide the globally unique identification needed to securely exchange business information on the Internet as well as unambiguously identifying all legal entities, physical / operational locations described in business documents. GLNs ensure lean and efficient communication and processing since names, addresses and other information about particular locations do not need to be communicated with every transaction. The necessary information is communicated only once, stored in the relevant system (e.g. Enterprise Resource Planning system) and subsequently retrieved by referring to a globally unique GLN.

The GL-number is a unique identifier for sender or receiver within PEPPOL.

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The Global Location Number can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required. Its assigned by GS1.

– The GLN can identify a company’s physical locations, for example a store, a warehouse, or a berth in a port.

– The GLN can be used to identify an organization as a corporate entity.– The GLN can also identify a company’s legal and functional entities

engaging as parties in a particular business transaction, for example as buyer, seller, or carrier.

– The GLN can be used in electronic messages and registries to inform trading partners about companies and their corresponding GLNs and associated GLN information.

– The GLN is also used by organizations in the public sector. In fact, various applications exist where governments use GLNs, either to identify their own agencies or to identify companies using central government databases.

The GL-number is a unique identifier for sender or receiver within PEPPOL.

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iVAT Linked

iVAT Linked an crowdsourcing open central repository (yellow pages) for VAT information about your business partners.Why iVAT Linked?• Everybody maintain only his data and share it with all business Partner,

providing them with the correct accurate data, necessary to issue a correct invoice (VRM: vender relation management).

• Linked makes it possible to check whether a taxable person is registered in more than one country.

• You can also use it to find out where a taxable person is established or has a fixed establishment, has appointed a tax representative or is registered directly for VAT.

• Sometimes you also need to know your customer’s general tax number. You can manage, protect and update the individual numbers by logging

in with your email address.You can now make changes and add other VAT numbers for other countries for this company. Go to http://linked.i-vat.com


The PEPPOL Central Registry: Service Metadata Locator (SML)

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• In order to deliver electronic documents from a sender to the correct recipient, all PEPPOL Access Points need to know about each other and the participants they support.

• To do this PEPPOL maintains one centralized service, called the Service Metadata Locator (SML). The PEPPOL SML defines which Service Metadata Publisher (SMP) to use for finding out the delivery details of any PEPPOL participant. This is a similar approach to how the World Wide Web is able to find websites based on their domain names.

• The PEPPOL SML is a core service that identifies all PEPPOL trusted Access Points and SMPs.


The NHS eProcurement StrategyKeystones of the initiative

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This is one of the reasons the eProcurement Strategy stipulates the mandatory use of GS1 andPEPPOL international standards.

GS1 Global Location Numbers (GLN) system. This means that there will be a single code to designate each supplier throughout the entire supply chain, from factories to clinical departments, which will facilitate electronic data interchange and synchronization.

each of the products in the data pool by GS1 Global Trade Identification Number (GTIN). This is a unique number that will be assigned to products and packages for the NHS. This code will include information such as the article description, manufacturer’s code, weights and measures, etc.

Source:


VAT returns to be filed in Spain electronically in real time

Spanish Tax Agency encourages creation of the SII/IIS (Immediate Information Sharing), an electronic VAT statement system requiring companies paying tax in Spain to file their Value Added Tax returns electronically for every invoice issued and received as of 2017.This platform lets users file VAT returns in real-time, replacing the system currently employed. Although the new system will not come into force until 2017 (delayed to 2018, no in 2016government), the AEAT plans to start the ball rolling with a pilot project in January next year.As of January 1, 2017, in a start-up phase the Spanish Tax Agency will require 62,000 businesses to use the IIS. This starter group is composed of:Large companies, with an annual turnover above 6,010,121.04 euros.Groups of companies for VAT purposes (Value Added Tax).Taxpayers subscribed in the (‘Redeme’) monthly refund regime.The remaining companies not affected by this first obligation may sign up to the new system voluntarily, with the option of cancelling their subscription at the end of each year.

iVAT EngineActiveX

component

ERP System

Logistical Module

Financial Module

•Ship From•Ship To•Item•Supplier / Customer•…

•Tax code•Amounts

•Mentionins•Sample invoice

•…

Quality of data

E-commerce and BtoB platform compliance wit iVAT

iVAT Engine, an engine that calculates the correct VAT

iVat is able to analyses incoming invoices on compliance.

Determine tax code to book the documents in the ERP system.

iVAT Engine to report to the different tax authorities in the different countries in the appropriate format.

More info: http://www.vatat.com/our-solutions/ivat-engine-integration/

[email protected]


VAT EngineActiveX componentinput output

VAT Code

VAT Rate

ReportingIndicationReportingIndication

Mentionings

Second VAT Code

Sample Invoice

Electronic Invoice

Extra Information

Decision Log

Supplier

Customer

VAT Numbers

VAT NumbersTypes

VAT NumbersTypes

Item Classification

Ship From / ShipTo

Ship From / ShipTo

Country Operation

Transporter

….

VAT Analysis in Europe and abroad

iVATEngineInput.XML iVATEngineResponse.XML

E-commerce and BtoB platform compliance wit iVAT [email protected]


BtoB Platforms:Principal Concept with buyer platform

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EDI

Web I/F

(Manual transaction; PO-Flip)

File conver

sionMappingTO Buyer

format

BtoB PltValidation

BtoB PltEnrichment

Legalarchiving

Digital signature

As Trustweaver

iVATValidation

ERP

Error Message

Master data & process data

iVAT [email protected]


International VAT filling in all countries with content compliance

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Dataextractors

International VAT reporting and filing

Spain SII

Only correct invoices with ERP-Tax-codes

FR

NL

BE

PT + SAF-T

Reporting

CH

Etc.

Service provider SII

Increased visibility on single record, makes content compliance check important before delivery of invoice to the buyer ERP

Filling in other countries possible, as monthly SAF-T in PTContent

Compliance

FormCompliance

Service provider

[email protected]

D4M

VAT engine

D4M

VAT Reporting

tool

D4M

Data Extractor


The End

“Think big, start up small, scale up fast!”

If you have a problem and nobody else can help you,Jos FeyaertsDesign For Margin D4M @ InCoPro BvBAA digitalization guide for your financial Supply ChainMob:+32-473 38 16 13 Skype: [email protected]@compl-aas.com

please find us:

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You can follow us on LinkedIn.

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www.linkedin.com/in/JosFeyaerts

WWW.slideshare.com/josfeyaerts

Soon:

WWW.designformargin.com

WWW.Thefinancialsupplychain.com


The Future of VAT in a digital platformizedWorld?

• How the Taxman will become partner in the end to end business process record?– Inline (as Latin America ) – outline (parallel process as PT and ES)– Data Mining and Blockchain

• The EU and national VAT-Action plans, what are the challenges and opportunities for service providers?

• When Content compliance’ is the heart, and ‘Form compliance’ is the surface area what makes services providers are not exploring it ?

• Why, How, What Can we do to realize content compliance services with Vat-engines integrate in the B2B platforms?.

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Date post:	12-Apr-2017
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The future of vat exchange summit bcn 10 oct-2016_jfs_v2

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