VAT Guide for Finance Directors - Why it’s now a Boardroom Concern

The real value of VAT within tax compliance shouldn’t be underestimated.  It’s one of the fastest growing and rapidly changing indirect taxes for finance teams globally.  And, as it’s a transactional tax, errors can’t be easily corrected so the consequences of errors can be far reaching from impacting supply chains, to increased audits, fines, lost revenue and reputational damage.

In recent years, the spotlight on VAT noncompliance has grown ever brighter. Tax administrations worldwide are turning their attention to the VAT gap. In Europe alone the VAT gap sits at €140 billion.

VAT is gaining in importance. Compliance is consequently becoming more complex and intrusive into core financial and physical supply chains.  For these reasons, it’s a tax which must be given a much higher position on any finance director’s agenda than before.

This guide addresses:

  • The role of systems and business processes for VAT
  • The crucial interaction between finance, tax teams and IT departments
  • Risks and challenges of the international landscape – risks and mitigation
  • The possibilities for automation or outsourcing support to meet VAT compliance obligations

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VAT – the world’s fastest growing tax

Invented in Europe, VAT is, according to the OECD, the world’s fastest growing tax by some distance. The mobility of capital in the modern world is phenomenal – profits and incomes are inherently and immediately transportable. But indirect consumption taxes, tethered to a transaction and a location, are an extremely attractive proposition to tax authorities, offering as they do a certain order and control.

In recent years, the spotlight on VAT noncompliance has grown ever brighter. Tax administrations worldwide are turning their attention to the VAT gap, which in Europe alone sits at €140 billion. These vast sums make the VAT gap a fast moving source of lost revenue that tax authorities are determined to slow. As a result, major shifts in VAT collection and enforcement are taking place, among them continuous transaction controls (CTCs), destination taxability, aggregator liability, e-accounting and e-assessment. These factors are contributing to a multifaceted overhaul of VAT ensuring tax authorities have increased and unparalleled levels of access to granular data leaving businesses little room for error and raising the stakes for compliance.