• Service: Tax, Indirect Tax
  • Date: 5/08/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Perils and pitfalls – developing tax relationships in new markets 

by Dermot Gaffney, Indirect Tax Specialist


Expanding into new markets may be necessary for growth, but can be a perilous and costly activity for business. One of the issues that will usually face new entrants into a market is that their inputs will exceed their outputs in the start-up phase, and as a consequence they are likely to incur more transaction tax costs than they charge to their new customers.

It can be difficult to forecast the value added tax (VAT) / goods and services tax (GST) funding requirements as you may not know how long it will take or how difficult it will be to get the refund from the tax authority, especially if you have no history in dealing with them and in many instances it is highly likely that you will be selected for audit.


Even mature businesses are often unsure whether delays in getting refunds for VAT/GST are because of an issue with the Tax Authority or in-efficiencies with their local management.


KPMG has just launched a VAT/GST Refund Survey which CFOs, Tax Directors, and Global & Regional GST Directors will find useful in assessing the risks and practical experience of getting refunds across 65 countries worldwide. It reports for residents and non-residents and assess the ease of getting a refund on a four point scale from Efficient – Somewhat efficient- Could be improved - No refund available.


Only 8 out of the World’s 20 largest economies were ranked efficient for resident taxpayers and that falls to 3 out of 20 for non-residents. The Asia Pacific region comes in well behind Europe, Middle East and Africa (EMA) but ahead of Latin America (LATAM). The most difficult territories in the region include Cambodia; China; India; Indonesia, Japan; Philippines; Sri Lanka; Taiwan; and Thailand.


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