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Ensuring Tax Compliance for UCaaS/VOIP Business: Why Billing Software Is Critical

Tax Compliance

Irrespective of the sectors, Unified Communications as a Service (UCaaS) will certainly play a key role in enabling vital communication links within organizations of all sizes. This is why the market for UCaaS worldwide is expected to hit nearly USD 73.9 Billion by 2024.

UCaaS businesses can take pride in the fact that they were able to reshape communication dynamics across industries and create a core pillar of digital transformation by enabling seamless communication between people across offices, devices, and countries. However, one of the major challenges that UCaaS and VOIP providers face when they offer subscription-based services to customers across sectors is ensuring tax compliance.

The large-scale growth of cloud-based architecture for UCaaS providers propelled businesses in this space to offer subscription-driven pricing models for their customers scattered across the globe. But these dynamic pricing models based on demand created a huge effort for enabling tax compliance for customers who operated in different jurisdictions with varying tax laws. Tax codes, rates, and regulations vary significantly across different countries or states within a single country itself. While there are tax partners for UCaaS providers to help them set compliant tax rates in accordance with the law of the land, the real solution to the tax compliance challenges lies with the billing platform deployed.

UCaaS companies need access to a comprehensive and robust billing solution having an integrated taxation service. This is to ensure that all fees and charges collected from customers by UCaaS providers are properly taxed according to local and national level tax policies and protocols in the country where the customer operates. The system should also enable providers to incorporate ongoing developments in tax regulations and deploy the same in real time to the billing process without requiring a disruption of service or subscription billing.

A powerful billing solution can help UCaaS and VOIP companies achieve better tax compliance by supporting them in:

Handling Multiple Tax Scenarios

The system of taxation itself provides a long list of categories that are applicable to each service and sub-service that is offered by a UCaaS provider. There will be services that are exempt from taxes depending on the service provider. Additionally, there will be even more services that are exempt from taxation because of the unique nature of the business or operational model used by the customer. There will be items that can be billed to customers with all tax included as well as ones where there is tax exclusion. A next-gen billing solution can allow the customers to choose the relevant tax code according to their business model, identify components in the bill that are exempted, tax inclusive, or tax exclusive.

Managing Tax Divisions

In addition to sorting items in an invoice into the three main categories of Tax Exclusive, Tax Inclusive, and Tax Exempt, there are more granular levels of tax classifications depending on the type of business. When customers work out of offices across geographies or different states within a country, then unifying their communication strategy with UCaaS raises the next set of challenges – incorporating multiple levels and hierarchies of taxes. This is where a powerful billing solution can make a difference. By offering the flexibility to vary taxes according to local or state level tax requirements and creating autonomous rules for invoice generation to different customers based on their respective tax division slabs, such billing solutions ensure that the UCaaS provider offers a highly satisfactory customer experience. It also allows UCaaS companies to provide tax invoices that have very itemized tax computations based on the origin and destination of the service consumption.

Facilitating OOB Reporting Capabilities

Out of the Box (OOB) Reporting deals with handling tax-change scenarios that are not defined in the initial engagement between a UCaaS provider and its customers. Such scenarios often create complications in the final invoice. These changes in taxation may have occurred due to several factors such as sudden changes in tax laws of the customer’s operational region, changes in business models, etc. A robust billing solution can automatically apply the revised tax rates when there is a tax change and ensure that the customer has a compliant tax regime followed for their invoices without disruptions. In addition to that, OOB reporting facilitates reporting such changes for accurate tracking and downstream accounting.

Taxation made easy

A powerful billing and revenue management software can help customers of UCaaS providers leverage the advantages of the communication framework while ensuring that they are compliant with the tax laws in their respective operational jurisdictions. The billing software thus proves to be a critical component in ensuring a sustainable business operation for UCaaS providers.
UCaaS providers who want to maximize their revenue, reduce costs, and avoid unnecessary revenue leakage, take a demo of OneBill today!

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