Tax time bombs you can’t ignore in 2025

The calm before the audit

Think your ERPEnterprise resource planning (ERP) is a type of software that organisations use to manage main business processes. tax setup is bulletproof? Think again. In the European Union (EU) alone, the VAT gapThe difference between the amount of VAT revenue due to a tax authority and the amount actually collected (the difference between expected VAT revenue and actual collection) was estimated at over €89 billion in 2022. That equates to around 7% of total VAT liability, and it’s not just the result of fraud. Errors, inefficiencies and misconfigured systems are to blame in many cases.

At the same time, tax authorities worldwide are adopting more aggressive enforcement strategies. Using real-time digital reporting and data cross-checking tools, they can now detect discrepancies faster and with greater precision. In this climate, relying on outdated ERP tax logic is more than just inefficient; it’s negligent.

2025 is poised to be a pivotal year for indirect tax compliance. Across multiple jurisdictions, reforms are being implemented that will significantly alter how VAT and other indirect taxes are reported and enforced. The warning signs are clear, and if your systems aren’t ready, the cost could be severe.

ViDA – The EU’s disruption to business as usual

The EU is pressing ahead with its VAT in the Digital Age (ViDAViDA or 'VAT in the Digital Age', is an EU initiative proposed by the European Commission that seeks to modernise and harmonise VAT processes for member states, by embracing new technologies. It is aimed at updating processes for the management of VAT, and reduce the VAT gap and fraud. The proposal also aims to address challenges in the area of VAT raised by the development of the platform economy.) reforms, the most significant change to VAT operations in more than 30 years. These measures will roll out mandatory e-invoicingElectronic invoicing - widely referred to as e-invoicing - is the exchange of a digital document between a supplier and a buyer. E-invoices are issued, transmitted and received in a structured data format that enabled automatic and electronic processing. They contain data in a machine-readable format so that an AP system can read an invoice without manual data entry, leading to faster and more efficient invoicing. and real-time digital reporting across member states, significantly raising the bar for indirect tax compliance.

Many ERP systems in use today simply weren’t designed for this level of transparency and speed. Misaligned tax logic, poor configuration or manual overrides can all lead to non-compliance under these new standards.

If your system can’t transmit, interpret or calculate tax in real time across multiple jurisdictions, then you are exposed.

Brazil – Complexity meets reform

Meanwhile, in Brazil, a country already known for its notoriously complex tax environment, the government is introducing a new dual VAT regime. The transition from PIS/COFINS and ICMS/ISS to CBS and IBS will require businesses to overhaul their systems entirely.

The new rules will demand updated invoice types, dual filing during transition, and localised variations that will further strain legacy ERP setups. Companies operating in Brazil cannot afford to wait until the reforms are fully live. Preparation must start now, or the impact on operational tax accuracy will be significant.

The cost of doing nothing

If you’re assuming these changes will affect someone else, think again. Global tax authorities are acting faster, more digitally and with far greater scrutiny than ever before.

Inaction today could lead to:

• Failed VAT audits

• Financial penalties for non-compliance

• Delays in closing financial periods due to a misaligned configuration

• Expensive last-minute ERP projects to catch up

• Lasting reputational damage with both authorities and stakeholders

Whether you’re operating in the EU, LATAM, or elsewhere, the risks are converging on a straightforward point: your ERP’s tax setup must be ready.

The solution: Get a review before you’re reviewed

Most finance and tax professionals admit that their ERP’s indirect tax setup hasn’t been reviewed since implementation. In some cases, it never has.

Our Tax Solution Review is a fast and objective way to determine your current standing. We analyse your existing ERP tax logic, rule configuration and reporting capability, and flag risks before they become problems. You’ll receive a clear report on where you are compliant, where you’re at risk and what actions you can take.

In a climate of audit unpredictability and legislative acceleration, this is the safest investment you can make in your ERP.