The pandemic has had a detrimental effect on the vast majority of businesses, to put it lightly. The enforcement of lockdowns and social distancing has fundamentally changed the way in which customers interact with companies. We have already seen many businesses, both small and large, make cut-backs, reduce staff and in some cases, stop trading altogether. We also now know that the economy has shrunk and we are facing a devastating recession, in the coming years.
Collecting and analysing financial data, both on a micro and macro scale is vital in understanding the damage caused by the pandemic and therefore how to combat it. Unfortunately, it can take time to build a complete picture, and while we are waiting, both the economy and individual businesses are suffering.
Some countries are doing better than others when it comes to real-time analysis of the impact of the pandemic. For example, prior to Covid-19 countries in Latin America were some of the first to adopt a form of digital taxation, known as Continuous Transaction Controls (CTCs). CTCs and VAT monitoring allow governments to gain a detailed, real-time view of how restrictions are affecting the economy. There are also in-line invoice data, which covers all transactions within a country and therefore provides even more detailed information. It’s countries that adopted these measures early that have a generally better idea of the financial damage of the pandemic.
The move from paper to digital taxation has been happening for many years and CTCs have been on the horizon long before Covid-19. However, the pandemic has highlighted the benefits of this change, and many countries are now seriously considering CTCs. As with many aspects of daily life, Covid has accelerated a trend that was already growing.
With many experts predicting that we will not see the economy recover until 2024, at the earliest, continual monitoring of the economic landscape is vital. Where businesses and even governments may have been cautious around digital taxation, we now don’t have the luxury. If businesses were to submit their actual invoice data to government platforms, in real-time, this could provide much-needed help to both governments and the businesses themselves. Not only can the companies keep a close eye on their financials, making adjustments if and when they need to, the government will also have access to invaluable data, allowing them to steer the economy in the right direction.
It’s also worth noting that digital taxation can have a wealth of benefits, apart from the help it provides in the current climate. Digital is easier, faster, with less paperwork and less time investment, allowing you to focus on other aspects of the business. Importantly, the digital approach is also more accurate, and you’re, therefore, less likely to make costly mistakes.
Salhan Accountants have a wealth of experience in taxation and can provide a variety of services in this area. If you’re thinking about making the step to digital taxation or you just need some advice, don’t hesitate to get in touch with us. Also, if your business is suffering due to the pandemic, we have experts who can help. Whether it’s forecasting, budgeting or managing accounts, we have the solution.