Recovering import VAT is an important way to reduce the costs of trade. Generally speaking, import VAT must be paid at the point of entry. Importers are entitled to reclaim this VAT at a later stage.
However, not all traders effectively recover their import VAT. Despite being the clear and obvious benefit of claiming back VAT savings, reclaim opportunities are often overlooked. Often because the logistics team does not effectively liaise with the finance department.
For that reason, it can be extremely beneficial to audit your VAT invoices and ensure you are recovering import VAT (And VAT on other A/P and T&E costs) wherever possible.
Your VAT recovery may be effective – but not optimal
That said, effective import VAT recovery does not necessarily equate with optimised recovery.
In many cases, there are even more effective and efficient VAT recovery processes you could be following. These processes have important business advantages. However, they require additional, often complex, input and guidance.
That’s why vship can be such an invaluable service. Vatglobal’s integrated VAT recovery solution enables importers to optimise VAT recovery – enhancing cash flow, reducing the cost of imports and increasing efficiency. Here’s how it works.
Enhance your cash flow with Import VAT Savings
Recovering your import VAT is important, but it still involves a cash flow disadvantage. Importers must pay upfront and reclaim at a later stage. That upfront payment can create a considerable liquidity issue, especially in the case of high value consignments.
Fortunately, some jurisdictions allow you to defer your import VAT. In such cases, you can account for your VAT when you file your VAT return. As you will be reclaiming your input VAT on your return, your VAT should balance out. In effect, you don’t actually have to physically pay the import VAT.
Moreover, those jurisdictions may also allow deferments on paying customs duties. Unlike import VAT, duties cannot be reclaimed. However, if you import regularly, it is often more efficient to consolidate your customs duties payments, rather than pay duties for every consignment at the point of entry.
A logistical-regulatory issue
Taking advantage of mechanisms such as deferred VAT may sound like a purely regulatory issue. And there is a lot of VAT bureaucracy to negotiate. In order to take advantage of deferred VAT, a company must typically be registered for VAT and manage all the attendant filing and paperwork.
However, regulations will differ from country to country. Deferred VAT is not always available. Some countries’ customs processes are more streamlined than others. VAT recovery will be subject to more complications in some places than others.
How to take advantage of vship
As an integrated VAT and logistics solution, vship ensures that you ship your goods through the most optimal channels.
For examples, Vatglobal’s ‘Fast Lane to Europe’ enables you to get your goods to any major EU market via the Netherlands. That means optimised VAT recovery (we will ensure you defer your VAT using the Netherlands’ Article 23 mechanism) and highly efficient, cost-effective import logistics.
By assessing your business holistically – in terms of all the relevant logistical and regulatory factors – vship ensures your VAT recovery isn’t merely improved but optimised. Get in touch with Vatglobal to enhance every link of your supply chain.