Cross-Border, The Tax ID Cometh

In the continued push toward globalization, one of the potential pitfalls in doing business in other locales, other currencies and other languages comes when it is time to pay the tax collector. Some rather opaque rules governing taxation and affirming identities may be tricky to navigate. Likewise, making sure payments are made to the appropriate government agencies can be an administrative challenge, with real costs — as in penalties.

To that end, Tipalti, which automates global supplier payments, said earlier this month that it has expanded tax compliance technology to firms who need to gather information, and use that information, to validate tax identifications that are specific to their suppliers in Argentina and Brazil. Validating that information, the company said, can help reduce fraudulent payments extended into those countries.

The process works with an online portal, through which suppliers in those countries enter business-specific details and banking information. The validation of that data takes place among 26,000 global remittance rules, a process designed to weed out issues that might affect payments completion (and, after all, remittances are becoming a way of life and economic growth for many nations globally).

In an interview with PYMNTS, Roby Baruch, vice president of products at Tipalti, stated that the need for accounts payable tax compliance initiatives comes as firms look for new ways to take on and reduce fraud. Identification of people or entities for tax policy must be made in tandem with verification of local records and in conjunction with local databases or other sources of information to ensure that payments are being made correctly and in a timely manner (thus avoiding penalties). The verticals that can be thought of as the “bread and butter” of tax ID tech are in the digital space and in any number of verticals “where two parties interact,” said Baruch, helping to restrict funds to those specific accounts (thus helping to sidestep payments fraud).

For companies in Brazil, he stated, Tipalti verification efforts extend across municipal and state codes for both individual workers (CPF) or corporations (CNPJ). In both countries, the firm endeavors to match those codes to payees’ names. In past product tax compliance offerings, the firm released software last year designed to support the U.S. Foreign Account Tax Compliance Act, helping to raise foreign companies’ awareness of IRS forms, for example.