Most, if not all of a 21st Century CFO’s numerous and growing responsibilities boil down to managing risk – mitigating its downside and maximizing the value the organization derives from its upside. Given that CFOs also tend to hold the purse strings tax automation investments, indirect tax groups should keep focus on risks when building a business case.
That doesn’t mean that indirect tax leaders should detail every last VAT compliance challenge the organization confronts. Instead, identify higher-level VAT risks that finance executives should consider when determining the opportune time to improve upon indirect tax automation solutions.
A survey of 400-plus finance, tax and IT decision-makers based in DACH, the U.K. and Ireland, France, the Nordics and Benelux indicates that companies in Europe face plenty of VAT compliance challenges, including the following:
- Handling multiple jurisdictions (cited by 38% of respondents)
- Remodeling to keep up with legislative changes (34%)
- The impact of the COVID pandemic (30%)
- Accounts payable VAT determination (29%)
- Lack of understanding from the IT department about what is required (29%)
- Lack of skills (29%)
- The impact of Brexit (29%)
- Accounts receivable VAT determination (24%)
- Lack of budget (24%)
That final challenge is a big one. Finance, tax and IT groups need to be on the same page when it comes to ensuring that an indirect tax automation solution addresses all current VAT compliance requirements while also providing the flexibility to adapt as the business grows and as those compliance requirements change.
A white paper examining the survey results contains numerous other insights that will help those three cross-functional partners get aligned on the indirect tax risks the organization confronts.
PLEASE REMEMBER THAT THE TAX MATTERS PROVIDES INFORMATION FOR EDUCATIONAL PURPOSES, NOT SPECIFIC TAX OR LEGAL ADVICE. ALWAYS CONSULT A QUALIFIED TAX OR LEGAL ADVISOR BEFORE TAKING ANY ACTION BASED ON THIS INFORMATION. THE VIEWS AND OPINIONS EXPRESSED IN TAX MATTERS ARE THOSE OF THE AUTHORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY, POSITION, OR OPINION OF VERTEX INC.