KPMG: Most Organizations Seem to Slash Efforts in Managing VAT/GST
Although majority of organizations globally have started to shift their focus from direct to indirect tax shown by increased VAT/GST rates and changes in tax policy, a global survey carried out by KPMG shows that VAT/GST “remains under-resourced, under-measured and under-managed.”
The survey, which gathered responses from 124 participating organizations across 27 countries, sets the benchmark for VAT/GST performance based on real data gathered from 100 businesses worldwide.
However, KPMG’s Global Head of Indirect Tax Services, Niall Campbell said the benchmarks providing “valuable insights into how businesses are currently managing their VAT/GST obligations globally” remain missing.
According to the survey, 75 percent of respondents admitted their Head of Tax and the Head of VAT/GST have no established agreement to “measure the efficiency and effectiveness of the VAT/GST.”
In addition, more than 65 percent do not have a global or regional heads of VAT/GST. Findings of the survey show that organizations which have regional heads happened to be in Europe, Middle East and Africa (EMEA) region, nearly “three times as many than are covered in the Asia Pacific (ASPAC) and Latin American (LATAM) regions.”
Furthermore, half of organizations whose turnover hits more than US$20 billion annually have no global head of VAT/GST. The survey goes on to show that 75 percent have less than 10 global VAT/GST specialists while less than 10 percent have only 40 or more specialists on the same scale.
“Given the scale of VAT/GST throughput being handled by multi-national organizations today, in many cases over US$5bn, there is clear evidence that organizations do not have sufficient resources or processes in place to manage the increasing complexity and scale of VAT/GST obligations globally. Investment in VAT/GST management by businesses does not appear to be keeping pace with the demands of global reforms, presenting a major business risk,” Campbell said.
The survey included how organizations observe accountability for VAT/GST, and found that 12 percent have no specific personnel handling the duty. The organizations surveyed are of split opinions over who is to be held accountable for VAT/GST – on one side are those that say VAT/GST is a tax function responsibility while the other half believe it is a finance function responsibility.
In terms of managing VAT/GST processes through proper documentation, only 40 percent in the EMEA region and 17 percent in the ASAPC and LATAM regions have related policies. Of these respondents, only 9 percent said their policies are excellent.
The survey, KPMG International Benchmark Survey on VAT/GST, is the first of its kind and will go on annually to trace the development of indirect tax benchmarks worldwide.