With VAT rules becoming more complex and business data becoming more transparent, effective management of global VAT has never been more important for an organisation. Maximum compliance is critical in order to lessen the risk of exposure. VAT audits are on the rise as tax authorities are increasingly using sophisticated data-mining technology tools on companies’ records while also seeking to increase revenues in these uncertain economic conditions. Breaches in compliance lead to both damages to reputation and financial penalties. Businesses simply cannot afford to misunderstand the impact VAT has on an organisation.
This is underscored by a new report released by PwC PricewaterhouseCoopers LLP on behalf of the European Commission, entitled VAT refunds and reimbursements: A quantitative and qualitative study. The report highlights the difficulties that some organisations experience with the VAT reclaim process. The numbers are staggering: in 2016, 695,000 VAT claims totalling EUR 109.4 million were submitted, representing an increase of 12.3% since 2013. The majority of these claims had a value of less than EUR 1,000, making the claim process extremely time-consuming for organisational resources. In fact, the report shows that it takes businesses between two and five hours to prepare and submit their VAT claims, mainly due to the time involved with the collection of data.
Discussing this topic are VAT experts from multiple industries who were interviewed by Remco Dewaerheijt, VP Tax & Product Strategy for VATBox, about global VAT developments for the ”Industry Leaders Reveal” series. These industry leaders offer their personal views and experiences with VAT and discuss the impact of VAT on an organisation.
Bas de Koning, EME Indirect Tax Manager at Bayer Crop Science, has been involved in VAT and other Indirect Tax matters for over 20 years. Bas and Remco discuss an advisor’s role in helping businesses understand the wide-reaching implications of VAT. Bas says, “Because VAT is so directly related to the business, you have to know exactly what type of transactions occur. So very often I don’t talk to the finance people, I go to the truck driver and ask him well, can you please show me the documents that you have? And I go to the gatekeeper and say, well, why do you let that guy out or in, and why can he pick up the stuff? Because that’s what VAT is.”
Ilona van den Eijnde, Global Trade & Indirect Tax Advisor at E&Y, advises national and international clients regarding Customs, International Trade and Indirect Tax and is a member of the fiscal litigation advisory group, assisting colleagues of various service lines with their fiscal litigation matters (objections & appeals to tax assessments), and advising clients on risks and opportunities. Ilona is also a university lecturer and involved in further developing the new Masters (LL.M & Msc) fully dedicated to indirect taxes, including the guidance of master thesis students throughout the year. Ilona stresses that “businesses and [tax] advisors should remain mindful that their data is ultimately transferred to tax authorities, and it’s currently not very clear what they can do with that data and what they want to do with that data.” She shares with Remco that she sees her role as an advisor to guide organisations “towards implementing technology solutions and informing businesses about data protection and to remain mindful of the impact of sending so much data over to the tax authorities.”
Bas weighs in on the importance of organisations and their data being in compliance. “Businesses are expected to come up with information on a real-time basis…Tax authorities nowadays come in and do an audit by taking a USB stick and pulling the data from your system, and the next day you have the report on your desk.”
Jeroen Lassche is an EMEA VAT Manager responsible for the in-house tax operations for the US-based biotechnology product development company with revenues of more than $24 billion and approximately 70,000 employees globally. He further underscores the importance of compliance. “VAT has a major impact on the [organisation’s] cash flow. If you do not follow the rules, the formal rules, which might differ in each country during a tax inspection, the company might end up with a huge assessment. That assessment can be followed by penalties and interest charges, which hit the profit and loss account of a business.”
To hear more from these VAT experts on how VAT can have a significant impact on an organisation and to learn more about their thoughts on global VAT developments, click here.
To listen to the full individual podcasts, click here.
If you are interested in participating in our “Industry Leaders Reveal” interview series, contact us at michal.milgalter@vatbox.com
