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The global tax reporting and payment landscape is evolving rapidly due to the increasing mandates for eInvoicing and Continuous Transaction Controls (CTCs). For international businesses, understanding and preparing for these changes is essential.
As governments worldwide strive to improve tax collection and close the VAT gap, the shift towards digital tax compliance is gaining momentum. This move not only enhances efficiency but also combats tax evasion and boosts revenues. By mandating CTCs, tax authorities can monitor transactions more closely, often in real-time, providing better visibility and control over business operations.
CTC country checker
The quick way to check the CTC mandate requirements in the countries you're trading with.
What's driving the move towards digital tax compliance?
Bridging the VAT gap
One of the main reasons for the shift towards CTCs is the persistent VAT gap—the difference between expected VAT revenue and the amount actually collected. Governments are striving to close this gap by enhancing tax collection efficiency, combating tax evasion, and boosting revenues. By mandating CTCs, tax authorities can monitor transactions more closely, often in real-time, improving visibility and control.The impact of digital tax initiatives is already visible, especially in the European Union. For instance, the VAT gap decreased from about €99 billion in 2020 to approximately €61 billion in 2021, thanks to real-time reporting and eInvoicing. Countries like Italy, which have led these initiatives, are encouraging others to automate and digitise Accounts Receivable (AR) invoice processing.
Beyond tax regulation: Economic insights
CTCs do more than ensure tax compliance—they provide governments with valuable economic insights. They help track industry trends, national sales patterns, and key market participants, aiding in the development of informed policy frameworks.Digital tax processes also reduce costs associated with paper and manual handling, fostering a more efficient ecosystem. They enhance payment methods, financing options, and the automation of tax return filings, building a more robust and transparent tax administration framework.
The benefits of digital tax compliance
Adopting digital tax compliance measures offers several benefits to businesses. It not only ensures adherence to regulations but also streamlines internal processes, leading to greater efficiency. Real-time reporting and eInvoicing reduce the administrative burden on companies, allowing them to focus on their core operations. Moreover, these digital processes improve accuracy and reduce the risk of errors, which can lead to costly fines and penalties.
Additionally, digital tax compliance enhances the relationship between businesses and tax authorities. With real-time data, tax authorities can provide quicker feedback and support to businesses, resolving issues promptly and ensuring smooth operations. This collaborative approach fosters trust and transparency, benefiting both parties.
The risks of ignoring CTC mandates
Navigating CTC and eInvoicing mandates is crucial for protecting your business from significant risks. Non-compliance can lead to severe legal, financial, and operational consequences that impact business continuity and market reputation.
Legal and financial repercussions
Ignoring eInvoicing and CTC mandates is risky. Tax authorities are prepared to impose fines and penalties on non-compliant entities. Penalties can range from a percentage of transaction values to fixed charges for each error. In extreme cases, such as in Malaysia, non-compliance can result in hefty fines and imprisonment.Operational and business risks
Meeting the technical requirements for issuing and receiving e-documents is essential for modern business operations. Non-compliance can hinder your ability to engage in public procurement and other critical activities where eInvoicing is becoming standard. Incorrect or non-compliant invoices can delay payments, affecting cash flow and financial health.
Moreover, businesses that fail to comply with CTC mandates risk being excluded from supply chains that require digital compliance. This can result in lost business opportunities and damage to the company’s reputation. Therefore, it is imperative for businesses to stay updated on the latest regulations and ensure their systems and processes are compliant.
Meet your CTC requirements with Transalis
For businesses navigating this complex landscape, partnering with a knowledgeable provider like Transalis offers a clear advantage. Transalis specialises in integrating supply chain operations and compliance, ensuring that your business meets global CTC requirements and benefits from enhanced operational efficiency and readiness for future changes.
Our solutions are designed to simplify compliance, reduce administrative burdens, and improve overall business performance. By leveraging our expertise, businesses can stay ahead of regulatory changes and focus on their core operations with confidence.
eInvoice Software
AR Automation
Scalable digital compliance for outbound invoice processes. Build the ideal solution for your AR team.
AP Automation
Convert & integrate inbound files with 60-80% ROI. Ideal for AP teams manually processing 2,000+ invoices per month.
Book a meeting with one of our eInvoicing experts to assess the CTC mandates you need to comply with? Book a meeting at a time that suits you, call us on 0845 123 3746 (UK) or +44 1978 369 343 (international callers), or email direct at sales@transalis.com.