Deloitte - EMEA Regional Indirect Tax Interview (ii)

Interview with Helen Thompson, partner, Indirect Tax, Deloitte United Kingdom

What is the most significant change to your region/jurisdiction’s tax legislation or regulations in the past 12 months?

It has to be Brexit! The transitional period for the UK leaving the European Union (EU) ended a little over 12 months ago. However, businesses are still working on improving their import/export processes. Some service businesses are also still adapting, for example, by changing value added tax (VAT) recovery methods to reflect the new VAT treatment of cross-border transactions.

What has been the most significant impact of that change?

The biggest impact is that customs declarations are now required at the UK/EU border. Businesses had to quickly ramp up their broker capacity to cope with the additional administration. Controlling the quality of the declarations is a concern for businesses as incorrect declarations can lead to an overpayment or underpayment of duty at the border, as well as penalties.

How do you anticipate that change impacting your work and the market moving forwards?

Deloitte’s Global Trade Advisory professionals have been busy advising businesses on processes and controls around import declarations. Generally, customs specialization is in high demand. We have helped clients identify and correct errors in post-Brexit paperwork as well as to streamline their processes and costs. We are able to prepare and submit declarations for clients on an outsourced basis at a very competitive rate.

What potential other legislative/regulatory changes are on the horizon that you think will have a big impact on your region/jurisdiction?

The Making Tax Digital initiative has already changed the way in which VAT returns need to be prepared and submitted in the UK. Similar changes have been or are being made in other countries as well as to the way in which businesses are required to issue VAT invoices.

What are the potential outcomes that might occur if those changes are implemented?

Businesses face a significant challenge in terms of staying abreast of the rules and exploring and implementing solutions so they can be compliant in the countries in which they operate. There is a lot of country-by-country variation, so what works in one country won’t necessarily work in another.

Do you think that change will have a positive effect on both your practice and the wider regional/jurisdictional market?

There is more demand than ever before for tax technology skills in the area of indirect tax and some exciting opportunities to develop careers in this area. It is encouraging that indirect tax is embracing the power of technology with a view to automating solutions for streamlined compliance. In the immediate future, given the lack of harmonization between countries, this is likely to remain a significant source of market demand.

Are there any regulatory/legislative changes you believe should be implemented in your region/jurisdiction?

There is a role for tax in promoting the transition to a green economy. This is a complex area of emerging policy, but having an indirect tax system clearly aligned with environmental objectives would support the wider changes that society needs to make.

How are issues surrounding the taxation of the digital economy affecting your work?

Many countries have now introduced VAT rules for taxing digital services, which means that even businesses with little substance outside their own territory may be required to register and account for VAT in multiple jurisdictions. Recently, Deloitte has seen tax authorities look at taxing responsibilities in relation to online marketplaces, again leading to an increased compliance burden for sellers and the marketplaces themselves.

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