Real-time reporting of wrong tax is not tax compliance; it is the faster distribution of errors.

The networks that now carry business invoices can deliver and report any invoice, anywhere, in near-real time. That problem is solved. But no actor in those networks checks whether the tax on the invoice is right, and the semantic layer needed to automate that check does not exist. Everything the ecosystem calls validation verifies that an invoice is well-formed: schema, business rules, code lists, arithmetic. An invoice that applies the standard rate to a zero-rated supply passes every one of those checks.

This paper sets out the argument in three observations, each verifiable, and asks where a tax quality layer should live.

Free, no registration required. By Jan Druppel and Danny Vermeiren, Banqup Group.