International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

What you can do to improve your VAT and excise tax compliance

Nick Castellina, of the Aberdeen Group, previews an upcoming web seminar where taxpayers can learn about how to bring long-lasting benefits to their VAT and excise tax compliance.

42-19755818

Excise and value-added tax compliance are difficult but essential processes. Due to frequently changing mandates, varied requirements that differ from jurisdiction to jurisdiction, and potential consequences, organisations struggle to ensure that these processes are completed as effectively and efficiently as possible. 

The Aberdeen Research Group has found regulatory pressure is not the challenge that organisations face in tax compliance. In fact, long and resource intensive processes take employees away from other important tasks and cost the organisation a significant amount of money. And the business systems that employees use to handle these tasks do not make the job any easier.

Today, 73% of organisations manage excise tax determination within their Enterprise Resource Planning (ERP) system. Unfortunately, ERP is not built to handle these tasks adequately. To find out why, Aberdeen asked survey takers to indicate the top challenge they face with the solutions they use to manage tax compliance. These challenges show that relying solely on ERP is not a good solution. The number one challenge is that these solutions are difficult to keep updated. When systems are inflexible, it becomes extremely difficult to incorporate frequently changing updates. Not only that, but change puts a major strain on IT resources. In fact, it typically takes an average of 18.86 days to update a system in response to excise tax change. This is far too long. Paired with the fact that system irregularities hinder performance and the solutions themselves are difficult to maintain, using ERP to manage tax compliance creates a major headache for IT.

Figure 1: Updates and changes provide challenges

Survey of updates and excise tax challenges.

As far as the employees that actually have to deal with ensuring tax compliance are concerned, ERP is not the answer either. A significant percentage of respondents indicated that their solutions cannot support the complete process and are difficult to use. This is because these solutions were not built from the ground up with excise tax management in mind. Basically, they are work arounds. Employees may have to complete certain parts of the process manually or on spreadsheets and then work back into ERP. This can cause mistakes as well as take employees way longer than it needs to.

Clearly, change needs to be made if organisations are to drive down the cost and remove the risk associated with excise and VAT compliance. A series of strategies, capabilities, and technologies can make these processes much easier. Organisations can receive significant benefits through best practices that will impact the bottom line.

If you’d like to hear how your organisation can take advantage of these benefits, listen to the free International Tax Review web seminar, which Nick Castellina, research director at the Aberdeen Group, and Kid Misso, director of pre-sales for Avalara gave on June 23, and which was moderated by Ralph Cunningham, managing editor of International Tax Review.  Nick shared data from his recent survey and Avalara provided insight on how their solution has helped organisations to automate tax compliance, reduce costs, and improve accuracy.

more across site & bottom lb ros

More from across our site

The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
With marked economic disruption matched by a frenetic rate of regulatory upheaval, ITR partnered with Asia’s leading legal minds to navigate the continent’s growing complexity.
Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.
The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.
Colombian Finance Minister José Antonio Ocampo announced preparations for a Latin American tax summit, while the potentially ‘dangerous’ Inflation Reduction Act has come under fire.
The OECD’s two-pillar solution may increase global tax revenue gains by more than $200 billion a year, but pillar one is the key to such gains due to its fundamental changes to taxing rights.
The solution to address the tax challenges arising from digitalisation and globalisation will generate more revenue than previously estimated.