VAT is an indirect tax levied on the consumption of goods and services in many countries around the world – a tax that is generally recoverable. However, VAT is often considered a grey, murky area, with many companies choosing to avoid the burden of VAT administration altogether, rather than delve into its complexities.
Isaac Saft, CEO of VATBox, a leading automated VAT recovery solution, explains the significance of B2B VAT recovery and the impact it can have an on a business’ bottom line.
Why should my business bother with VAT?
Every year, there are 1.2 trillion VAT transactions in the European Union alone. This includes travel expenses, conference fees, supplier goods, marketing services and a host of other expenses that take place when company representatives do business on foreign soil. It also includes VAT charges that are levied on imports, P-cards, and foreign AP, among others. The percentage of VAT charged can be from 5 to 27 percent of the invoice amount, a significant amount to leave ion the table, unclaimed. With industry estimates suggesting that $20 billion in VAT is left unclaimed annually, there exists a huge opportunity for your business to improve its bottom line.
Can my finance team reclaim VAT?
In theory, yes. However, in practice many companies find the VAT refund process complex and tedious. The tax authorities of each country have differing regulations related to tax rates, exemptions, reverse charge mechanisms, languages, reporting requirements and deadlines. Your in-house finance department may not possess a clear enough understanding of the detailed and widely-varying regulations and requirements in each country. Further, companies that do make the effort to recover their VAT are often unsuccessful. Claims are often addressed using semi-automated/manual and error-prone processes that are both time-consuming and costly. Incorrect claims can result in penalties, lack of financial governance and improper compliance.
How can VATBox help?
VATBox’s advanced, automated VAT recovery solution seamlessly extracts standard data and scanned invoices from your ERP, TES and other internal systems. This is data that already exists – but often remains unexploited for the purpose of VAT recovery. VATBox’s advanced platform closely examines travel expense data and employee travel expense reports. Automatically eliminating errors, duplications, disqualified evidence, and incomplete data – VATBox finds disparities between actual expenses and documented expenses, between real costs and considered costs. VATBox also highlights any data leakage – the significant gaps between data and evidence. Then, VATBox validates and prepares, submits and manages foreign claims worldwide.
How did VATBox get started?
In a previous position with an Israeli company, I traveled quite often and of course, submitted expense reports throughout my travels. I knew my company could recover the VAT but when I tried to understand the mechanics of the process, I realized that it was quite complex. That got me thinking, what about other companies? Does anyone really know how to maximize VAT recovery from company T&E? As an entrepreneur, I did extensive research and found that Fortune 500 companies can spend over a billion dollars in travel annually, potentially leaving millions of dollars of recoverable VAT on the table every year. While aware of the bottom line impact, many of these companies simply cannot take the risk of being in non-compliance, and therefore write off the full T&E amount as an expense. With this opportunity in mind, I founded VATBOX, currently the recognized leader in the foreign VAT recovery domain.
What type of companies can benefit from VAT recovery?
VATBOX’ services are relevant across a wide range of industries. Whether a company is in the technology sector or the highly competitive pharmaceutical and life science industries, or even consulting firms and manufacturers, any company with foreign or domestic VAT-incurred expenses can benefit and increase their bottom line.
Where does VATBox see itself in three years’ time?
In three years, our goal is to dominate the European market, and then use the data and technology to expand into other regions as well, including Asia, the Gulf States and Russia, all huge market opportunities. In addition, we are focused on furthering our technology developments to ensure that VATBox can qualify every transaction in every jurisdiction, thereby providing even more value to our customers.
Founded in 2012, VATBox implements the highest level of data security and compliance with all international rules and regulations of the various jurisdictions, and offers companies 360⁰ visibility into their VAT spend and recovery. Let us show you how your company can thrive in today’s complex financial times. Request a free demo here.