The embracement of e-invoicing and digital reporting mandates by global tax authorities is instigating a comprehensive transition in digital tax compliance. Numerous jurisdictions across the globe are anticipated to introduce these requirements in the upcoming two to four years, thus presenting an essential call to action for the C-suite of worldwide multinationals.OECD, KPMG, and RAFIT reports project this global transition.
E-invoicing and digital reporting mandates present significant challenges and risks for multinational companies. These include operational disruptions, penalties, damage to reputation, and escalated audit scrutiny if companies do not adapt promptly. E-invoicing systems vary across the globe, making a localized approach costly and inefficient. E-invoicing mandates offer access to transaction-level data that can significantly impact a company’s tax responsibilities, enabling faster identification of irregularities.
Understanding e-invoicing procedures, evaluating existing systems, and identifying areas vulnerable to risk will lay the foundation for strategic planning. This comprehension will subsequently inform decision-making about resource allocation, technological investments, and crucial priorities.
Once risks are assessed, the C-suite can create and implement a global strategy for e-invoicing and digital reporting. This strategy should cover technology adoption, process changes, employee training, potential outsourcing, and compliance management. Active C-suite involvement is vital in defining the company’s digital future.
Considering the expansive and comprehensive nature of mandates, they require a collective business response. Organizations must establish cross-functional teams, promoting interdepartmental collaboration to counter the multifaceted challenges posed effectively. Crucially, active participation and leadership of the C-suite can ensure a unified and strategic organization response.
The establishment of a dedicated tax technology department should be a strategic priority for the C-suite. The tax technology department can fuel innovation and better facilitate data analytics. Such departments also play a vital role in managing risks associated with digital compliance mandates.
The tax technology department should develop an appropriate system structure to comply with e-invoicing mandates. However, the C-suite holds the strategic decision-making power when it comes to scalability of systems architecture and centralization of tax compliance solutions.
The unwillingness to adapt to evolving digital compliance standards can lead to severe consequences. Therefore, robust leadership and strategic engagement are indispensable. We find ourselves in a critical epoch where the C-suite of global multinationals must engage proactively to ensure compliance, mitigate risks, and seize opportunities for business growth and success.
More details about this topic can be found in the full article written by Kathya Capote Peimbert, who serves as the global lead of e-invoicing and digital reporting at KPMG International, on Bloomberg Tax.