16 December 2017
Bo Harald

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Bo Harald - ZEF, Transmeri, Demos, Real Time Economy Program

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Dream scenario for VAT auditing

04 August 2009  |  3893 views  |  0

Making life easier and work more productive for SMEs in EU is a central goal for EU and most member states. More productive SMEs means more productive large enterprises and lower cost for the public sector (equals lower tax pressure and thus again better productivity and competitive position - less inclination towards protectionism).

Now there is a clear opportunity for a mega-step. It goes as follows:

1. Out of the 24 m enterprises 98-99% are microclass (less the 10 employees - almost half of them have only one employee).

2. Most of these could and should move to cash-based accounting (CBA) - as EU and many member states encourage. Simplified accounting saves cost from the outset and lowers stress levels.

3. CBA opens up an opportunity to automate it all by linking payments in electronic bank account statements with sent and received e-invoices. This saves money on a huge scale - most likely in the Deutsche Bank study that promises 54bn in Germany.

4. Tax authorities are rightly worried about VAT fraud - big leakage is a risk in paper and e-mail based invoicing.

5. e-invoicing is in itself a clear improvement - but some member states have not followed the equal treatment principle and made e-invoicing more complex with mandatory qualified digital signatures - thus raised the threshold and costs to migrate to safer and more productive invoicing practises.

6. Automated accounting in the CBA sector would clearly shrink the space for VAT fraud and make auditing less needed, easier and less costly as (i) SMEs have an additional big incentive to digitalize invoicing, (ii) payments are linked to the e-invoice, (iii) cost-efficient and secure storage is already offered by professional service providers, (iv) corresponding sent/received and paid invoices can be found in the counterparts digital environment, (v) auditing can be automated, (vi) VAT payments and reporting can move to real time..

Enough reasons to take real action for sure. Is it happening in your country? Are tax authorities simplifying things? Are your enterprise organizations pressing for it? Doing something real for massive cost savings? Or just complaining and lobbying for nitty-gritty or clinging-to-the-past practises??? We - in the Real Time Economy program - are working hard on making this next dimension of e-invoicing real.

The blogosphere and social media at large should prove their power by adopting this kind of issues with quite some gusto. Please feel free to kick the ball forward.

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job title Chairman/Founding member
location Helsinki Region
member since 2008
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