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What Does The Research Say?
A recent self-reported survey of nearly 500 indirect tax decision makers, representing large global companies with annual revenues of at least £40 million, sought to understand their tax performance, categorizing them from ‘market-leaders’ to ‘market-trailers’.
In the UK and Ireland, a quarter of respondents considered themselves ‘market-trailers’, suggesting that indirect tax compliance is impeding business operations.
In the United States, 45% of organizations labeled themselves as ‘market-leaders’, indicating a forward-thinking approach bolstered by efficient technology. Conversely, businesses in the UK and Ireland were predominantly ‘market-trailers’, with 70% considering their operations prone to indirect tax compliance risks. US entities have dedicated more effort to digitization and automation.
Across Europe, various factors, including the arrival of the VAT in the Digital Age (ViDA) proposal and ongoing digitization, are prompting businesses to adopt a more cautious approach to indirect tax compliance. There have been added complexities, coupled with major changes in EU policies over the years. This has made compliance more difficult to attain and maintain.
However, businesses across Europe feel well-equipped to handle upcoming or existing mandated e-invoicing rules. Further they believe there is sufficient resources available to manage change. Additionally, they feel prepared to manage ever changing VAT registration rules.
In the DACH (Germany, Austria and Switzerland region, a significant portion identified themselves as ‘risk-adverse’. Indicating a more cautious approach to indirect tax compliance. Non-compliance has proven financially material for many businesses in this region. Non-compliance can give rise to significant fines and interest on outstanding amounts.
Maintaining indirect tax compliance is a constant effort due to ever changing regulations in other countries. Need to register a new entity? Need to register as a Digital Service provider?
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