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Knowledge and Information Management on Value Added Tax (VAT)


Knowledge and information management on a global scale has an important meaning in shared services sector. Understanding this fact ensures a substantial advantage in this fast growing industry.

According to the latest ABSL (Association of Business Service Leaders) report, in 2015 there were 532 SSC/BPO centers operating and hiring approximately 150 thousand employees which makes Poland one of the fastest growing market in the region. Furthermore, Poland itself is one of the most frequently picked locations by companies willing to outsource their finance and accounting processes. Initially, only the basic operations (such as invoice processing) were transferred to the SSC/BPO, today operation of  complex processes, advanced knowledge and information management are required in order to stay competitive. VAT compliance is one of the best examples of such complex processes.

VAT compliance services are provided for the entities established across dozens of EU and non-EU countries. Since tax regulations in different countries vary greatly and the VAT itself is the main interest of the tax authorities, it is substantial to ensure the regularity of the process. Even the slightest incompatibility with the law regulations may cause serious financial penalties upon a client and as a consequence, resignation from the provision of services.

Before transferring VAT reporting to the SSC/BPO, global corporations had to employ tax and accounting specialists in every country, responsible for ensuring the compatibility of the VAT declarations with local tax regulations. The centralization of tax processes in SSC/BPO required a vast amount of knowledge about VAT regulations in countries where clients conduct their business activities. Knowledge and information management is not a one-time process. Using the SSC/BPO terminology, it is not possible to migrate a VAT process and leave it unattended. Constantly changing regulations in the local, EU and global law, result in continuous changes in the VAT related processes. In order to maintain high quality of the provided services, which means reporting in accordance with the VAT regulations, it is necessary to be on the SSC/BPO level - efficiently manage knowledge about VAT law amendments and implement them respectively.

Behind every process, there are people who are responsible for it and it is their competence, knowledge and effort which determines the quality of the services provided to the clients. Therefore, information and knowledge management cannot be defined primarily as acknowledgment and implementation of changes in the law, but it is equipping employees performing the reporting process with the sufficient level of knowledge. It is achievable through well planned and higher order training programs, completion of which enables the employee to conduct tax processes with full responsibility.

It is noteworthy, that at present tax authorities of the EU Member States require more detailed information for control purposes. The major project across Europe is Standard Audit File for Tax, the report of which requires not only substantial tax knowledge, but also considerable IT know-how. The scope and volume of the data demanded by the tax authorities is enormous, and the clients often use different accounting systems. It causes the data to be disorganized, which makes the efforts to extract them very significant and requiring cooperation of tax and IT departments. The times when a single accountant could manually fill and send a VAT declaration are inevitably coming to past.

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