Increasing VAT Reclaim through Effective Indirect Tax Management

Increasing VAT Reclaim through Effective Indirect Tax Management

If your company conducts any international business, there is a very good chance you have already been exposed to the web of confusion that is VAT management. Managing indirect tax data is a critical part of the financial health of an organization. Any company dealing with VAT has to conquer the following objectives:

  • Consistent reporting throughout the organization
  • Efficient initial processing
  • An easy way to access the data at any given time
  • Managing the data in a way that is safe and secure
  • Handling the surge of new VAT regulations and updates to the current policies

Regardless of the size of the company, these can be very hard goals to achieve and maintain over time. Therefore, your company must have a financial team in place that is prepared to handle and recover VAT both from travel transactions and business transactions. As your company grows, you need a VAT solution that will simplify and streamline the process of VAT reclaim. When you have the right systems in place, you can guarantee an increased return in your VAT and a more fluid process for managing the data.

Efficient Big Data Management

Data analytics is a field that since its inception has been plagued by human error. From simple missteps like adding a zero to completely forgetting relevant information, it begs the question: why do many companies still rely primarily on a manual process for VAT data management when the entrants of this data are so fallible? Now is the time to go digital with your VAT management-before it all becomes too unmanageable for transfer into a VAT management program.

By implementing a system that allows for digital entry directly by employees, not only does it become easier to clarify the VAT reclaim in each receipt, but it also cuts down on the need for a long, cumbersome paper trail. Yes, hard copies of relevant receipts should always be kept in case of an audit or financial review, but when employees can input data by uploading receipts immediately, there is less stress to try and track down the hard copy at the last minute.

Another part of efficient data management is organizational management. It starts from the financial team being prepared to handle the increased influx of VAT transactions, and therefore having a structure stemming from a specific VAT manager or a member of your team who can place an extra emphasis on VAT refunds.

But this is a two-way street. Regular training sessions should be held as employees are onboarded or as major policies change so that each individual who is making these purchases understands how to enter the necessary information, and therefore ease the pressure on the financial team when it comes to tracking all pertinent VAT transactions.

Big Data: Bigger Problems or Bigger Benefits?

Being involved in transactions that involve VAT isn’t necessarily a bad thing. Usually, it is a positive step for your company because it means you are working to build a deal with another organization, or have expanded your business to a new territory. Both are great moves; however, with the introduction of new business growth comes the introduction of new VAT regulations.

According to a 2015 PricewaterhouseCoopers study, the main challenges of indirect tax functions are:

  • The need for more transparency and increased restriction for reporting the VAT data
  • Housing the data in multiple locations
  • The need for manual review, reconciliation and manipulation of the data
  • “Inefficient collection and review of non-integrated data”

In 2016, PwC released a study regarding big data management and VAT. One of the key findings was that access to big data could bring more precision to the VAT reclaim process. This is because access to tax records and regulations allow VAT technologies to target the exact amount a company is due to get back from a transaction involving VAT. Plus, since VAT transactions only serve one purpose, the technology can capture the scenarios and store them in memory for future use. The introduction of new VAT technology is not without its hurdles, but as the technology becomes smarter, your company will be able to see an increase in your VAT return. According to the report, using big data will allow companies to “pro-actively manage reputational risk and the transparency agenda, detect VAT fraud, and/or identify tax authority changes relevant to an organisation”.

Enterprise Technology

Using enterprise technology to manage data is becoming a more integral element for all companies, but especially larger ones. These programs are essential for simplifying the daily complex tasks an organization must complete on a regular basis. These programs can sometimes work together to provide you with a better result.

For example, many Fortune 500 companies rely on SAP Concur as a tool for expense reporting. Automating this process means better oversight, more confidence on compliance, and simplifying the process of submitting the data for the employees. When SAP Concur is paired with VAT technology via VATBox, the results of this technology can be taken to the next level. Not only can VAT be more accurately determined, but reports can be produced that identify where extraneous spending is coming from, and how expenses should be adjusted in the future.

VAT technology is constantly evolving, and therefore when paired with other technologies like SAP Concur, VATBox ensures VAT which can be recovered does not fall by the wayside. The program reviews all receipts, targets the essential transactions, and identifies what money your company is due to recoup from the purchase. By tracking this information, your company will be prepared for financial reviews or audits at any time, as reports can be compiled and printed in order to meet your needs as they arise.

Keeping your VAT Data Safe

The introduction of the European Union’s General Data Protection Regulation in May 2018 has caused many businesses to realign how and where they store their data. The GDPR also changed how data can be accessed. These increased and unique security guidelines have impacted how companies manage the intake and storage of their VAT data, no matter how many EU countries they do business with. It is easier to cover your bases early rather than wait until the last minute you need it, which is why while the GDPR officially went into effect on May 25, countries were given over six months’ notice to make the necessary technical adjustments.

When it comes to storing indirect tax data, it is essential for companies to go above and beyond the regulations both for the clients’ and their own sake. If you do not have a surefire way to store VAT data, you risk losing access to the essential information needed for a VAT refund. If you were to be audited, or if any client were to invoke the GDPR, that information would need to be accessible immediately. You will also need to be able to prove that the transaction-related material was stored within the guidelines of GDPR.

VATBox focuses on 7 key points of data protection with both digital and physical elements as part of our mission to ensure the highest standard of data security.  When you choose the right technology to manage your indirect tax data, make sure they meet the highest standards not just of the GDPR, but are prepared to meet the regulations of other countries as well. With the number of new directives and policies being released on a daily basis, the technology must be malleable enough in order to handle the adjusted and can be updated automatically.

The True Value of VAT Reclaim Solutions

The amount of indirect tax data that exists is increasing daily, whether from standard transactions or outside sources that help you get the highest VAT refund possible. The issue of storing that data ultimately comes into question, but with the right technology and appropriately designated storage space, there will be less questioning whether the data produced is accurate. As the amount of VAT data increases, there are more bases to cover, but a well-organized financial team can lead the charge to make sure your company is prepared for all potential VAT management situations.

The result of implementing VAT solutions is ultimately two-fold: an increase in your VAT return and peace of mind, knowing you have a stable solution to a situation that is rapidly changing. With the introduction of new VAT regulations and tax policies on a near-daily basis, manual management is too cumbersome and time-consuming for VAT management. When you make the transition to automation, you reduce the risk of error, make results easier to understand, and ensure that you are able to recover the VAT that you deserve in full.

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 too how your company can thrive in today’s complex financial times.

Copyright © 2021 VATBox Ltd. All rights reserved. 

We appreciate your interest in VATBox!

* Mandatory Fields