All over Europe, governments are digitizing the collection of indirect taxes such as value-added tax. Spurred on by a looming global recession—and burdened with debt accumulated during the Covid-19 pandemic and energy crisis—their aim is to increase public authorities’ visibility into transactions and collect more revenue by closing longstanding VAT gaps.
In truth, tax digitization instruments like the Standard Audit File for Tax, or SAF-T, and continuous transaction controls. or CTCs, are neither brand new, nor European. For instance, CTCs first emerged in Latin America way back in the early 2000s, with countries like Brazil and Chile now boasting the world’s most advanced CTC regimes. In Europe, the rollout of CTCs has been much more gradual, largely due to pre-existing tax enforcement infrastructure and e-audit advances.
Source: bloombergtax.com
