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The 2012 Benchmark Survey on VAT/GST

Despite the shift to indirect tax globally a new survey released by KPMG International shows that businesses are simply not keeping pace. In fact, according to KPMG International’s 2012 Benchmarking Survey on VAT/GST, VAT/GST continues to be under-resourced, under-managed and under-measured by the majority of global businesses.

New business models, increased globalization, finance function transformation and rapid legislative change are all putting VAT/GST management under tremendous pressure. Compliance risks, obligations and challenges are increasing – but are global businesses reacting appropriately? Not so, according to the Survey, which has some interesting and potentially worrying findings.

In summary, our survey highlights:

- Despite the shift to indirect tax globally, VAT/GST remains under-resourced, under-measured and under-managed in most businesses. New business models, globalization, finance function transformation, and rapid legislative change are putting VAT /GST management under even more pressure. Simply put, most businesses are not keeping pace.
Results show:
. a lack of VAT/GST performance benchmarks visible to the CFO and the wider business.
. a lack of full-time resources allocated to the management of VAT /GST, at local, regional and global levels.
. limited embedded processes of sufficient quality to effectively manage VAT /GST from end-to-end across the business, although the situation has improved over 2011.
- Businesses face increased compliance risks, with increasing interest, penalties and business disruption costs and rising reputational risk.
- Given the scale of VAT/GST throughput being handled by global businesses, there is no doubt that significant opportunities are being missed to manage risk more efficiently and effectively, improve cash flow and reduce bottom-line cost.
- There is greater evidence of quality VAT/GST management in Europe, the Middle East and Africa (EMEA). In Asia Pacific (ASPAC) and Latin America (LATA M), however, businesses should be concerned about how compliance risks are being managed. This is particularly relevant in jurisdictions where the size of VAT /GST throughput is increasing, local rules are becoming more complex, and no specialist local resources are in place who understand local culture, VAT /GST treatments and tax authority behavior.
- Larger businesses demonstrate higher levels of performance benchmarking and resource allocation to VAT /GST.
- Compared to the 2011 survey results, there is tangible evidence that some businesses have started to take steps in the right direction to assert effective VAT /GST management on a global scale. For example, accountability for VAT /GST has shifted significantly, with more tax departments assuming ownership from Finance. We believe that the starting point for the effective management of VAT /GST is absolute clarity over where in the business its ownership sits.
- Businesses with effective VAT/GST management are still in the minority. There is still a very long way to go before the resources, processes and technology strategies are embedded and accountabilities set to adequately manage the global VAT /GST challenges. Given the rapid pace of change, which is expected to continue through 2012 and beyond, even the more advanced businesses are simply running to stand still while others are falling even further behind.
- CFO’s in the FS sector are much more likely to judge the effectiveness of their tax department with VAT /GST in mind and set key performance indicators (KPIs) to do just that.

Download the 2012 Benchmark Survey on VAT/GST (PDF 40 ages) :

Mardi 29 Mai 2012