Key findings from the research:
- 46% of companies across the UK, Germany and Sweden are not confident about complying with the various real-time e-invoicing controls implemented across Europe.
- 51% expect no investment in internal VAT functions in 2020.
- 46% don’t possess an internal VAT expert; 23% search the internet for advice.
- 58% find ‘a lack of comprehensive understanding of VAT rules of different countries’ one of the three most difficult aspects of tax management.
- 29% of UK firms ranked ‘real-time reporting’ as the most pressing issue.
THURSDAY 30TH JANUARY 2020 – LONDON, UK
Vatglobal, the leaders in outsourced international VAT and tax solutions, has today released the findings of new research exploring the evolving European VAT landscape, specifically highlighting the current situation across the UK, Germany and Sweden. With respondents working in finance and tax, the research provides a first-hand look at the challenges those on the tax front line are facing. The findings have been published within Vatglobal’s new whitepaper ‘Meeting the challenges of a changing tax landscape’.
The European tax landscape is undergoing a digital transformation. Governments across the region are taking Latin America’s lead and implementing electronic taxation systems, as well as beginning to shift to real-time rather than periodic models, with the intention of both simplifying tax’s traditionally paper-based reporting system and cumbersome processes and enhancing compliance to address the tax gap. However, developments have not been universal and a patchwork of regulations is fuelling confusion and complexity.
46% of companies do not feel confident about their capability to comply with the patchwork of European e-invoicing regulations and, specifically, a growing necessity for real-time reporting in countries implementing this is becoming a big challenge for UK firms; 29% of respondents based there selected it as their most pressing issue. This problem is being exacerbated by UK firms diverting the fewest resources of the three regions to the process, as well as not having in-house VAT expertise (46% of all companies don’t possess one), leaving those responsible scrambling to submit accurate information within deadlines. The situation drives more than one fifth (23%) to search the internet for answers to crucial regulatory questions.
“The ongoing introduction of new tax regulations across Europe is leaving organisations scratching their heads around VAT,” said Gareth Kobrin, CEO at Vatglobal. “In the UK, initiatives such as Making Tax Digital (MTD) are adding complexity when it was intended to streamline, and companies don’t yet have the right measures in place to comply. It’s an even trickier situation for exporters to nations with more specific rulings around document formats, such as Italy and Spain. Furthermore, many firms are making life more difficult by seemingly not making the most effective use of the limited resources they have made available to the function.”
Other key findings include:
- Across the regions, when asked to rank a list of the most relevant indirect tax issues, managing invoicing / e-invoicing was ranked highest (mean rating of 3.77 on a ranking scale of 1-5), suggesting a widespread reliance on older invoicing processes seen primarily as a finance and accounting function and a general lack of confidence, understanding and oversight of international regulatory shifts towards e-invoicing.
- Nearly one quarter (24%) of respondents revealed that identifying areas of indirect tax risk within their firm was the top challenge, indicating a pressing need for a combination of relevant tools and resources to both understand relevant issues and having ability to monitor and address this on an ongoing basis.
- Of the 49% that do expect to invest in VAT functions in 2020, less than half (44%) anticipate investment in technology, despite its increasing necessity for compliance, efficiency and oversight.
- The vast majority of businesses (86%) do not use an online tax knowledge portal, yet, 43% consider it to be the easiest and most streamlined method of learning about tax and controls.
“Those responsible for VAT efforts are crying out for more resources but there’s an apparent reluctance from businesses to invest in tools; this disparity needs to be addressed,” continued Kobrin. “Online learning portals are considered to be the most accessible method of tax education and, crucially, they don’t require the large upfront investment of other all-encompassing solutions or expert consultations.”
“Providing real-time national and international tax data, users have access to accurate and actionable information that removes the need to turn to search engines. Companies can no longer leave teams under-resourced and expect them to confidently navigate the swirling sea of VAT regulation. For organisations big and small, easily accessible tax databases will become a vital tool and there’s an opportunity for some to put themselves on the front foot by addressing the issue now.”
To view and download Vatglobal’s whitepaper, Meeting the challenges of a changing tax landscape click here.
Vatglobal is an industry leading international VAT consulting and technology company providing indirect tax compliance services to businesses all over the world by supporting our client’s international trade by taking over the complexities of managing VAT and other indirect tax obligations. Vatglobal’s 12,000 clients range from small and medium-sized enterprises, such as Amazon sellers and start-ups, to large multi-national corporations looking for a fully outsourced VAT technology partner.
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