Despite the continued trend to indirect taxation globally, a majority of businesses still don’t have effective VAT/GST management practices in place, says KPMG survey.
Despite the shift to indirect tax globally, a new survey released by KPMG International shows that, simply put, businesses are not keeping pace.
According to KPMG International’s Second Annual Benchmark Survey on VAT/GST, new business models, globalisation, finance function transformation, and rapid legislative change are putting VAT/GST management under tremendous pressure.
Yet 63 percent of respondents to the survey do not have a Global Head of VAT/GST, 64 percent do not have regional Heads of VAT/GST to oversee the changes and challenges and only 23 percent of businesses have specific VAT/GST performance goals that are visible to the CFO.
The Survey showed that the majority - 59 percent - only have between one and 10 full-time employees focused on indirect tax worldwide and one-quarter of respondents have no full-time equivalent VAT/GST specialists at all.
On the plus side, many businesses in the survey are on the right track and are implementing policies that set out how VAT/GST should be managed. Forty-seven percent of EMEA respondents have such policies (up from 38 percent last year), ASPAC - 32 percent (up from 12 percent last year), LATAM - 20 percent (up from 12 percent) and with 33 percent in North America. But there is still much work to be done as only 32 percent of respondents rate their VAT/GST tax policies as very good or excellent and only 20 percent scored the implementation of policies as very good or excellent.
In terms of future investment in VAT/GST management, 39 percent prioritized investment in processes, 35 percent prioritized technology and 26 percent prioritized people. Enhancements in these areas will be needed as we see the range of tasks increasing for this function to include everything from managing of VAT /GST audits, preparing of VAT /GST returns and providing advice to the business.
“There is still a very long way to go before the resources, processes and technology strategies are embedded and accountabilities set to adequately manage the global VAT /GST challenges,” says Gary Harley, KPMG’s Head of Indirect Tax in the UK. “Given the rapid pace of change, which is expected to continue through 2012 and beyond, even the more advanced businesses are simply running to stand still while others are falling even more behind.”
For more information and to view a copy of the Second Annual Benchmark Survey on VAT/GST please click here or contact Gary Harley, Head of Indirect Tax KPMG UK+44 (0)207 311 2783.
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