Real time VAT reporting by business 'inevitable' says Revenue boss
Real time reporting of VAT receipts is "inevitable", the head of the Revenue Commissioners told a tax conference in Dublin yesterday.
Real-time reporting has been launched for payroll taxes, including pay as you earn (PAYE), with workers and employers now able to track payments on an ongoing basis.
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Revenue expects similar reporting requirements for VAT to follow, even if it is some way off. "It is inevitable that this is the impulse," Revenue chairman Niall Cody said in response to a question from the floor.
"The reason we stopped at payroll, payroll is much easier. With VAT it is a question of real-time reporting with your invoicing, or real-time report with product," he said.
The design of the system for VAT should involve not only tax professionals, but companies, and Mr Cody called on employers' groups to join the discussion. Revenue introduced real time PAYE reporting this year and the system now covers 2.66 million workers and 200,000 employers with reporting on a monthly basis.
The scale of the data gathered by the Revenue is shown by the fact that it processed 29m payslips between January 1 and May 14.
The conference heard that tax authorities now hold vast amounts of data which they exchange with other tax authorities across the world.
The collection of data on a global basis has enabled Revenue to identify and contact tax payers with substantial foreign income and to notify them that the Government has that data, Mr Cody said.
Ireland's data collection is the tip of a global iceberg, the conference, organised by the Irish Tax Institute, heard.
"We have built statistical models to identify potentially risky outliers and we are also at the early stages of using machine-learning methods to identify risk indicators," Mr Cody said. The extent of global cooperation is shown by an explosion in the data collected by UK tax authorities.
Tom Smith, director, Tax Strategy and Professionalism with HM Revenue and Customs, said the number of records it received under the common reporting standard - under which jurisdictions voluntarily swap information - rose to 5.67m in 2018 from 1.63m in 2017 and covered 40 countries.
Switzerland alone sent information on 2m accounts to 20 countries in just seven months, according to Jorge Narvaez Hasfura, who is part of Baker McKenzie's Global Value Added Tax Steering Committee and an expert on transfer pricing.
"The impact on taxpayers is starting to become evident, data, data and more data.
"The level of the exchange of activity taking place today to identify unaccounted cash and assets is just unprecedented," he said.