You may find it difficult to determine the appropriate VAT codes for goods and services, especially if the business is global. Luckily, IT technology companies have developed VAT API tools for automated validation of VAT and VAT rates.
Businesses must pay the correct Value Added Tax (VAT) to the tax authority where they operate and collect the tax amount from consumers by adjusting product/service prices. Sales taxes tend to change from time to time and merchants change their product rates accordingly. In addition, domestic sales tax rates differ from state to state.
If your business is global, there are hundreds of different VAT rules and rates. It is impossible to keep a notebook of VAT rates or guidelines with so many rates and rules. Here the VAT API comes to your rescue!
If you own a business or are a developer looking for inspiration, read on to find some of the best VAT validation and calculation APIs to use.
What is VAT?
VAT is an indirect tax levied at every point in the production and supply chain where a monetary transaction takes place. It is one of the main general tax systems in the European Union (EU). Besides the EU, other countries around the world also use the VAT system.
According to an Organization for Economic Co-operation and Development ( OECD ) report, 170 countries and territories worldwide have or will have introduced the VAT system as of November 1, 2020.
VAT is essentially a consumption tax that consumers pay at every stage of the sale of goods or the provision of services. It does not burden the goods manufacturing or service company as the company can bill its customers for it.
VAT calculation is a complicated task as there are multiple tax panels. In addition, since it is a partial tax, you must correctly deduct the VAT already paid on the product and then pay the rest by charging your customers for the entire VAT.
To facilitate business operations, software developers have studied VAT regulations around the world and developed application programming interfaces or APIs for appropriate VAT rate calculation or VAT ID validation. VAT APIs are highly recommended if you operate on ecommerce platforms .
These tools are essentially easy-to-integrate code bases that you can connect to your enterprise resource planning ( ERP ), accounting tools, or ordering systems to automate the VAT process.
Importance of VAT Validation
#1. VAT is one of the most important sources of revenue for governments around the world. When there is no centralized online system for verifying VAT number, VAT Directive violations occur. Businesses and end consumers can develop alternatives to avoid VAT, and the treasury will suffer.
#2. VAT ID validation is the most trusted source for confirming the tax status of the party you are transacting with.
#3. VAT ID validation tells you the VAT rate previously paid in the supply chain, so you can adjust your own rate and avoid paying more or less to the VAT agency.
#4. All invoices in the EU region (except a few EU countries) must have a VAT number so that governments can seamlessly track financial activity.
Now let’s look at the best VAT APIs.
If you are the software developer for a commercial building and tasked with choosing the right API for tax rate identification or VAT validation, you must try Abstract’s VAT Validation API . You can easily integrate the tool with existing business tools for automated VAT operations. Some of the notable features of this API are:
- The API developer updates sales tax data when the policy or tax rate changes.
- It helps your systems to retrieve reduced or standard rates for goods and services.
- Abstract’s VAT Validation API provides full VAT coverage for all EU countries.
- The API features banking system level security such as 256-bit SSL encryption .
Abstract’s VAT Calculation API comes with easy-to-use libraries, setup tutorials, and extensive documentation so developers don’t have to jump through hoops. The developer built the API around representative state transfer, also known as the REST architecture.
Tax Data API
Tax Data API is a state-of-the-art solution revolutionizing tax calculation and compliance for businesses of all sizes. With seamless data integration and comprehensive tax data coverage, this API streamlines the process of obtaining accurate tax information, enabling organizations to save time, reduce errors, and ensure tax compliance.
Real-time tax data: Access up-to-date tax rates, rules and exemptions from various jurisdictions around the world. Stay up to date with the latest tax changes and ensure accurate calculations and compliance.
Customizable Tax Calculations: Customize tax calculations to meet your specific business needs. The API supports a variety of tax types, including sales tax, value added tax (VAT), goods and services tax (GST), and more.
Global Coverage: Expand your business worldwide with confidence. The Tax Data API provides comprehensive tax data coverage for multiple countries, ensuring accurate calculations for cross-border transactions.
Compliance support: Ensure tax compliance with ease. The API helps you automate tax compliance processes, reducing the risk of costly penalties or audits.
Scalable and Reliable: Designed for high performance, the Tax Data API offers a scalable infrastructure; Rely on its robustness to handle large amounts of tax-related data with ease. Easy integration: Seamlessly integrate the tax data API into your existing systems in less than 10 minutes.
Check out this video tutorial:
Do you want to grow your business and reach a huge customer base across the EU region? Are you inhibited by the cross-border implementation of sales tax in the EU countries? Well, not anymore when you start using VAT APIs for services like VAT number validation, VAT rate calculation and VAT invoicing.
Some other salient features are:
- Best-in-class security, metrics, and performance via the Amazon API Gateway service.
- Because the developer hosts the API on Amazon Web Services (AWS), it can handle thousands of requests per second.
- Get the correct VAT rate for your customer using IP address, geolocation or ISO country codes.
- Instantly get the status of your customers, whether they are business or consumer, by looking up VAT IDs in the EU VIES or the HMRC VAT database.
The API includes two use cases: Telecom, Broadcast or Electronics (TBE) and GOODS for physical goods. Thus, the API tool is perfect for any industry in any country that follows the VAT system.
Vat layer is another popular name for VAT API tools. If you are a developer or business owner responsible for automating your organization’s VAT process, you can try this API for free. It offers essential services like EU VAT rate calculation, instant VAT ID validation of EU states and VAT compliant price calculation.
If you feel you need to increase the operation scale and send more than 100 API requests, you can get a paid subscription depending on the load. The premium subscriptions also offer 256-bit HTTPS encryption to keep your business data out of the hands of cyber criminals .
Vatstack VAT API has long been a reliable and trusted tool for companies conducting cross-border B2B sales. It includes automatic B2B VAT solutions like VAT rates, VAT validations and VAT reports. The tool allows you to ensure whether your customer is a business or a consumer and set the correct tax status.
Vatstack is essentially a collection of APIs for VAT processing through enterprise software integrations. Because it’s a REST API, implementation is effortless.
Additionally, the predictable resource-oriented architecture allows the API to receive form-encoded requests and return JSON-encoded responses. Additionally, API request authentication requires either a secret key or public key for data security.
If you want to focus on business marketing and revenue growth instead of complex VAT processing, you can try Lovat APIs for automated VAT compliance. It comes with separate APIs for dedicated performance. For example, you can use the FEED API to upload transaction details and the VAT RATE API will provide accurate VAT rates for services or products you sell.
The Lovat VAT API Suite also follows a strict set of security features to protect business data. For example, you must always authenticate all requests with a secret key. Additionally, you must send all API call requests over the HTTPS data transfer protocol. When you send HTTP API requests, the Lovat API rejects those calls.
VAT Sense API
If you intend to sell your products or services in EU, UK and world market, VAT Sense API will help you to be compliant with VAT regulations and price the offers accurately. Aside from being compliant with VAT regulations, VATSense’s API also allows your business to validate the VAT numbers of the counterparties with whom you transact money.
Additionally, you can also use the REST API to get the correct VAT rate for EU, UK and global regions. That’s not all! You can also get GST rates and correctly price your product for international customers. Finally, there are additional features such as automatic currency conversion and VAT-compliant invoices.
Valdit VAT API
Valdit VAT API was built on REST development architecture to allow easier integration of API requests. The Valdit API connects to the EU VAT Information Exchange System (VIES). Therefore, it can help you retrieve the correct VAT status for all customers in the 27 member states of the EU.
It also offers a simplified data entry system for online checkout so customers aren’t overwhelmed by asking for unnecessary VAT details. In the backend, the API ensures that the client has an active VAT number. Additionally, you can centralize VAT number verification tasks for accounting and auditing purposes.
If you are looking for a free open source VAT API alternative, you must try VATcomply API . Besides validating VAT numbers online, the tool also allows you to retrieve multiple VAT details of your customer through IP address geolocation. In addition, you will receive foreign currency exchange rates when doing business with international customers.
The developer built the tool on the ASGI platform (Asynchronous Server Gateway Interface) Starlette. Because Starlette is one of the best toolkits for building asynchronous web applications in Python, the VATcomply API supports high-throughput API requests of up to 1,000 API calls per second.
VAT is a complex indirect tax system. Therefore, you need to be extra careful when pricing your goods or services to the end consumer. This can help you avoid non-compliance with VAT regulations. In addition, the proper implementation of VAT in your company will allow you to enter the foreign market and expand your customer base.
You can use any of the above VAT APIs to validate a customer or calculate the correct price when selling products or services on the domestic or foreign market.
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