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- 90 percent of government audits in the past five years yielded positive results
- 36 percent decrease in the cost of audit penalties and fines over the past two years
- 30 percent reduction in the time dedicated to addressing tax errors over the past two years.
- These firms were nearly three-quarters more likely than their competitors to automate the updating of tax rates in a central database.
- They were two-thirds more likely than other firms to effectively assets the exposure level to government audits.
- They were 35 percent more likely to use third-party firms to conduct internal audits.
Many companies doing business outside the United States have to comply with an array of value-added tax (VAT) programs. In fact, more than one-third of the finance and tax professionals responding to a recent survey by business information provider Thomson Reuters said they had seen an increase in penalties and fines levied on indirect taxes, including VATs, as well as sales and use taxes.
It’s hard to say if a VAT will ever make its way to the United States. No tax is ever popular, and many businesses worry that a VAT, particularly if added to the existing tax structure coachoutletonlineusa.weebly.com polarized sunglasses, will threaten the wobbly recovery. In October 2010, this article from Reuters points out. Many see it as one way of corralling America’s ballooning debt.
How did these firms get there? The survey showed the firms had several common characteristics, including:
The upshot? Finding ways to effectively manage indirect taxes is becoming increasingly important, according to a January report from Aberdeen, “Managing Value-Added Tax (VAT) in a Global Environment.” The top reasons given by respondents for improving their company’s ability to comply with VATs was a jump in government audit activities, dynamic government and legislative requirements. Executive pressure to expand operations across geographic boundaries was a driver for 40 percent of companies.
Despite these pressures, the survey found less than half of companies automate the tax process. Making do with manual processes can raise the costs of complying with tax requirements and audits. “As government continues to rely on indirect tax and VAT to address their budget shortfalls polarized sunglasses, businesses, more than ever coachoutletonlineusa.weebly.com, need to implement best practices to mitigate the skyrocketing costs associated with complying with the dynamic indirect tax landscape,” says Carla Yrjanson, vice president of Tax Research and Content at Thomson Reuters, in a statement announcing the results of the recent survey.
The Aberdeen report identifies the characteristics of companies that excel in this area. Among them:
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