Taxes for Internet businesses just got simpler
Written by Jambu Palaniappan, Managing Partner, OMERS Ventures
OMERS Ventures is excited to co-lead an investment round in Fonoa, a platform for global tax automation. I’ve known the Fonoa founders for five years since we worked together at Uber, where they built and ran Uber’s business in Southeastern Europe. The opportunity for a new technology platform to improve and automate how companies are compliant with an increasingly complex taxation ecosystem is massive and we believe the time is now to build a revolutionary business in the category.
The only guarantees in life, so the saying goes, are death and taxes. Indeed taxation is nearly as old as time, first introduced by the Ancient Egyptians in 3000 BC. In the millenia since, the world has developed new, technology-driven businesses, but the process of calculating, reporting and remitting taxes has not evolved at the same rate. Our belief at OMERS Ventures is that as economies and companies evolve, so must taxation.
So why is the time now for an evolution in a relatively undisrupted sector?
First, as governments around the world have spent billions of dollars to fight the economic impact of Covid, there is also clearly pressure to ensure that all revenues they are owed are reported and collected.
Second, the degree of complexity that these new, global, technology-driven businesses have created has increased rapidly.
Here’s another way to think about that complexity:
- If you’re an ecommerce wholesaler in Germany, you may need to determine if a customer must pay VAT based on where they are and what they are buying. But once they exceed a certain threshold of purchased items from you in the tax year, those rules and rates may change.
- If you’re a food delivery marketplace in Australia, you may need to issue up to four invoices per transaction.
- If you’re a ridesharing company in Mexico, you may need to remit in real time to a tax authority the earnings of every driver on every trip completed on the platform.
That’s where Fonoa comes in.
The Fonoa team has built a technology-first solution that moves from helping companies lookup tax IDs of customers across the globe, calculate appropriate taxation rates and towards real-time transaction reporting to tax authorities and invoice creation.
The product brings simplicity to a complex problem with an API that is easy to integrate and manage, and can be configured to solve very specific needs.
It is also highly scalable; customers can go as deep as they need to at a transaction level, but broad enough to be a single global platform for a company that transacts in multiple countries.
Perhaps most importantly, there is not a better team to build this type of product. Davor, Ivan and Filip are seasoned operators with experiences across entrepreneurship and scaling marketplaces, and they’ve brought in a world-class team of tax experts and engineers to build that vision. The team is building what we believe will be a critical part of global technology infrastructure.
We’re excited to be a part of their journey.