TL;DR
Digital Continuous Transactional Reporting (DCTR) is rapidly becoming a core operating model and ERP challenge for multinational groups, not simply a VAT filing update.
The OECD has issued a global reference framework for DCTR, confirming that VAT compliance is moving toward real-time, transaction-level reporting and will increasingly affect how businesses manage invoicing, order-to-cash and procure-to-pay processes across jurisdictions.
The report warns against jurisdiction-specific requirements that increase cost, complexity and the need for fragmented local workarounds.
Consequently, companies have an interest to analyze and invest early in interoperable, scalable digital VAT architectures to manage future DCTR obligations efficiently, hence reducing long-term compliance run costs.
A new reference point for digital VAT reforms
The report on DCTR, provides a comprehensive framework for the design and operation of real-time, transaction-level VAT control systems. Countries have already introduced e-invoicing and real-time reporting obligations although in mere isolation. The OECD report responds to this fragmentation by setting out common principles for the design, governance and operation of DCTR regimes, with the explicit objective of improving consistency, efficiency and interoperability across jurisdictions.
For multinational groups, this publication is more than policy guidance. It is a strong indication of where global VAT compliance is heading.
1. From periodic reporting to continuous compliance
Traditional VAT systems are built around periodic returns, ex-post audits and manual reconciliations. DCTR regimes fundamentally change this model by enabling tax authorities to access transaction-level data in real-time or near real-time, directly from business systems.
The OECD identifies this shift as a structural transformation of VAT administration, driven by three main objectives
- reducing the VAT gap and fraud through earlier detection of inconsistencies;
- improving the quality and timeliness of tax data; and
- modernising tax administrations through automation and digitalisation.
For businesses, this means that VAT compliance is no longer a back-office, end-of-period exercise. It becomes a continuous process embedded in invoicing, accounting and ERP workflows, where data accuracy and system reliability are critical.
DCTR directly affects core business functions, including order-to-cash, procure-to-pay and tax compliance, as well as the IT systems and supplier and customer interfaces that support them. As such, assessment and alignment of internal functions and controls are of critical importance.
2. E-invoicing as the backbone of DCTR systems
The report stresses that DCTR regimes cannot function without robust electronic invoicing frameworks. E-invoicing is not presented as a standalone obligation, but as the core infrastructure enabling real-time VAT control.
The OECD highlights the importance of:
- structured invoice data rather than unstructured formats;
- automated validation and data exchange with tax authorities; and
- alignment between invoicing, accounting and VAT reporting processes.
For companies operating across multiple jurisdictions, the lack of harmonised e-invoicing standards remains a major challenge. The report therefore strongly encourages governments to rely on internationally recognised data models and open standards, reducing the need for country-specific adaptations.
3. Interoperability and system design from a business perspective
The OECD guidance urges to focus on system interoperability to tackle fragmented, costly national solutions:
For example, some organisations have been forced to implement multiple country-specific compliance layers on top of their ERP landscape, resulting in higher maintenance costs and increased risk of system disruptions when requirements change.
These challenges go beyond compliance complexity and can translate into operational disruption, transaction rejections, greater dispute exposure and increased audit risk when transactional data is validated in real-time.
The takeaway for business: Future-proof VAT compliance depends on scalable and interoperable architectures, not on local point solutions.
This has direct implications for ERP design and integration models, tax engines and reporting layers, and data governance and master data management. Companies should expect DCTR obligations to expand in scope and frequency, and should design systems accordingly. In practice, sustainable compliance depends on integrating DCTR requirements into existing commercial processes and data flows, rather than creating parallel tax-only systems.
4. Convergence as an opportunity, not just a policy goal
Convergence between DCTR technical solutions is not only desirable for tax authorities, but also a concrete opportunity for businesses.
The OECD explicitly encourages the reuse of existing and emerging common technical specifications, standards and processes for DCTR data exchange. This approach allows companies to build compliance models that are scalable and reusable across jurisdictions, instead of maintaining multiple local solutions.
Areas where convergence delivers immediate value include:
- data formats and technical standards;
- semantic models used to describe transactions; and
- communication and exchange protocols with tax authorities.
By leveraging commonly used components, businesses can reduce implementation costs, simplify system maintenance and accelerate compliance in new jurisdictions.
At the same time, convergence also benefits tax administrations, enabling interoperability between national DCTR systems and facilitating cross-border administrative cooperation. Over time, this will increasingly support cross-border consistency and smoother international operations for multinational groups.
The OECD also recognises that convergence is often evolutionary. Where DCTR systems are already in place, jurisdictions are encouraged to gradually align with commonly used solutions, starting with key trading partners and expanding over time.
5. Reducing local deviations is key to sustainable compliance
The report explicitly warns that local technical deviations can become major barriers to interoperability, reusability and international data exchange.
Examples include mandatory data localisation rules or requirements to use local service providers, both of which significantly increase cost and complexity for multinational businesses.
In practice, multinational groups often find that a single jurisdiction-specific mandate can require separate invoicing workflows, local integrations and parallel reporting processes, creating duplicated system builds that are difficult to scale across the wider organisation.
The takeaway for business: the more localized the design, the less sustainable the compliance model. Companies should therefore closely monitor not only when new DCTR obligations are introduced, but also how they are designed, and whether they align with internationally recognised standards.
6. Data governance, security and internal controls
Continuous reporting significantly increases the volume and sensitivity of data shared with tax authorities. For businesses, weak data governance may not only result in compliance failures, but also trigger operational downtime, audit escalation and data protection challenges when sensitive transactional data is exchanged continuously.
The OECD therefore dedicates substantial attention to data governance, security and accountability frameworks emphasizing the need for:
- clear ownership of VAT data within organisations;
- strong validation and control mechanisms before data transmission;
- alignment with data protection and privacy requirements; and
- auditability of automated processes and decision logic.
This is particularly relevant for large organisations, where VAT data is generated across multiple systems, entities and jurisdictions. Weak governance models will increasingly translate into compliance risk, including greater audit exposure, delayed business processes and reputational impacts where errors are identified in real time.
7. Implementation as a critical success factor
The OECD recognises that poorly designed DCTR regimes can create unnecessary complexity and cost. It therefore encourages governments to adopt phased, transparent and consultative implementation models, giving businesses time to adapt systems and processes.
For companies, this reinforces the importance of early preparation. Once a DCTR regime is live, remediation becomes expensive and operationally disruptive.
What this means for businesses today
The report unambiguously confirms that :
- VAT is a real-time operational process rather than a periodic obligation;
- tax, finance and IT functions must operate in a fully integrated way;
- data quality and system reliability are compliance-critical; and
- strategic technology decisions made today will define future compliance costs and flexibility.
Businesses that treat digital VAT reporting as a local or purely technical issue risk facing growing fragmentation, higher costs and reduced control as new regimes are introduced.
The call for action for multinational groups:
Businesses should start to:
- map current and upcoming DCTR and e-invoicing obligations across jurisdictions;
- assess ERP and invoicing readiness for real-time transactional reporting;
- define a scalable target architecture that avoids country-by-country fixes;
- strengthen data governance, controls and auditability across business units; and
- pilot interoperable solutions in priority markets to reduce future rollout effort.
How can NOEMA help?
NOEMA stand ready in help assessing the impact of DCTR regimes on your VAT operating model, design interoperable and future-proof compliance architectures, and support the implementation of digital VAT strategies that align tax, finance and technology functions.
Our focus is on helping businesses reduce long-term run costs, minimise local workarounds, accelerate onboarding of new jurisdictions and manage audit and dispute exposure through sustainable, globally consistent digital VAT compliance frameworks.
Do not hesitate to get in touch if:
- you are facing multiple upcoming DCTR mandates;
- your ERP landscape is not aligned with real-time reporting;
- local requirements are driving costly country-specific builds; or
- you need a scalable governance and control framework.
