The future of VAT - automatic and real time

Bo, fascinating blog.  You are right, potential savings are huge, and we should give greater priority to innovations in payments incorporating VAT.  

Some small steps are already being taken towards this vision.  For years, proprietary fuel card networks have been stripping out VAT and providing a monthly consolidated statement for end-customers (some businesses conduct 1000s of fuel purchases each month).  The savings, through reduced admin and fraud prevention, are significant. 

What is the next step?  Perhaps general acceptance commercial payment cards (e.g. procurement cards, T&E and small business cards) will begin to allow businesses to buy other products (besides fuel) in the same way.  The technical challenges have been identified and are being addressed. 

A new generation of alternative payment solutions will eventually address the VAT area more elegantly than cards, and I suspect these may be developed in the most "digitised" societies e.g. Scandinavia.  

In the short term, card-based solutions are quick to launch and scale internationally, and perhaps we should get commercial cards to do more to help with VAT.    

Thank you Mathew,

Comments:  

Mathew: "Some small steps are already being taken towards this vision.  For years, proprietary fuel card networks have been stripping out VAT and providing a monthly consolidated statement for end-customers (some businesses conduct 1000s of fuel purchases each month).  The savings, through reduced admin and fraud prevention, are significant." The step to automate the VAT payment (assuming that the card payment picks up the VAT-info) should be short.

Mathew: "What is the next step?  Perhaps general acceptance commercial payment cards (e.g. procurement cards, T&E and small business cards) will begin to allow businesses to buy other products (besides fuel) in the same way.  The technical challenges have been identified and are being addressed." We have started a discussion to get card transactions integrated into accounting and VAT paid in the same way in real time as soon should be the case with e-invoicing.

Mathew: "In the short term, card-based solutions are quick to launch and scale internationally, and perhaps we should get commercial cards to do more to help with VAT." I agree - but it should be done in a unified way with other payments.