Small firms, in particular, have a significant burden in terms of tax compliance. According to a 2017 CNBC study, 25% of small company owners in 2016 were unaware of their effective tax rate. According to a study conducted by the National Small Business Association, administrative costs are a significant drain on resources, with 67 percent of small firms paying more than $1,000 per year on federal tax administration.
Entrepreneurs Davor Tremac, Filip Sturman, and Ivan Ivankovic established Fonoa, a tax automation firm, in 2019 to try to alleviate the load. The Dublin, Ireland-based firm provides an API that assists businesses in determining if their customers and suppliers are taxable, calculating and reporting the taxes that apply to their transactions, and reporting their transactions to tax authorities.
Index Ventures, OMERS Ventures, FJ Labs, Moving Capital, and individual angel investors all contributed to Fonoa’s $25 million fundraising round. The money will go into worldwide expansion and employment across the board, according to CEO Davor Tremac.
Automation of Tax Compliance
Uber alums Tremac, Sturman, and Ivankovic know how tough it is to compute and report taxes to governments throughout the world.
“Businesses and customers trade on a worldwide scale in the digital world. In a news statement, Tremac stated, “Country borders are no longer a limiting factor, and technology drives global trade at an ever-increasing pace.” “With greater regulatory scrutiny, dealing with tax concerns in a more automated and trustworthy manner has become an increasingly serious issue. We created a one-stop-shop that manages the intricacies of worldwide taxation, allowing digital enterprises to focus on their core competencies.”
After a transaction, Fonoa’s platform validates the tax status of buyers and sellers and calculates the necessary tax to charge, providing a locally compliant invoice. It also provides for automated real-time reporting of transactions to a country’s government as necessary.
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Fonoa already enables tax automation transactions in more than 100 countries and plans to grow to more than 140 by the end of the year. Customers include Zoom, Uber, Lime, and GoStudent, as well as digital service providers, micro-mobility operators, gig economy platforms, and subscription-based businesses.
In a statement, Richard Alexander, worldwide VAT lead, stated, “Fonoa’s solutions have assisted Zoom with growing our global marketplace services by aiding with tax determination, invoicing, and tax compliance.”
According to one source, the tax management software industry was valued at $5.24 billion in 2018 and is expected to reach $11.19 billion by 2026. Vic.ai, a firm that develops software to automate accounting and financial processes, as well as Botkeeper, Candis, Mercury, and Auditoria, compete with Fonao in this space.
Fonoa, which bills itself as a “remote-first” company with a 14-country workforce, says it wants to add more people across the US, Europe, Asia, and Latin America in the coming months.
