To internationally active middle market companies—especially those that are new to the global marketplace—value added tax (VAT) can be an intricate form of taxation.
Essentially, VAT is a system by which governments raise revenue through the value added to a product or service at each stage of supply. Due to complexity inherent in this method, companies often rely on automated accounting functions and local finance personnel to actively manage the obligations that come with VAT compliance.
While this approach might help meet minimum compliance requirements, it does not ensure that a company is strategically managing the opportunities and risks that are present in a VAT environment. In addition, tax authorities are increasingly focusing on VAT because a substantial gap exists between what the authorities expect to collect and what is actually remitted. There is an increased demand for transaction data to be made available and more authorities are turning to electronic compliance methods (invoicing and reporting) to help control VAT.
Review and remediation are the best defenses against tax authority scrutiny, the risk of discovery of errors, as well as to avoid potential penalties that might apply for any errors that an inspection could discover.
Next steps
- Understand your global VAT position and how effectively the business is managing it
- Identify the opportunities and risks
- Develop and implement a strategic plan to prioritize your path forward
How can RSM help?
Our VAT Comprehensive Opportunity Review (VATCOR) provides a comprehensive and strategic assessment of your VAT environment, allowing you to make informed decisions and mitigate potential risk. This assessment identifies opportunities for you to:
- Create VAT savings
- Improve VAT compliance efficiency and accuracy
- Improve operational and structural efficiency
- Reduce transactional risk
- Improve understanding and knowledge of VAT across the organization
