Successful Management of VAT can help you avoid tax overpayments, lower audit risks and decrease operational costs significantly. It can also support business expansion and streamline partner and supplier transactions. Here are a few things you need to know to avoid losing funds and lower your tax burden so that you can remain competitive.
Education on VAT Management
Whether its payment or deduction, VAT is such an important part of our daily lives that its knowledge is essential. It’s becoming crucial for everyone to obtain basic knowledge on VAT. Individuals dealing with proper optimizing of Vat management and finance are required to have VAT knowledge to eliminate future problems.
Business employees can be trained to understand what impact VAT has on accounting and reporting. They need to be aware what documents are necessary in order to reclaim VAT on expenses. Customers and suppliers can be educated on VAT and how the changes may affect them, hence preserving the business relationship.
Price Waterhouse Coopers explains that an awareness training is necessary especially before VAT implementation. A training and education program with a company’s employees which defines the tasks involved, determines underlying issues and determines the tailored approach for implementing VAT.
Interim Management of VAT
Interim management of VAT may be necessary in certain emergency situations. Mergers, where deals are completed quickly, may not offer sufficient time for companies to plan in advance. Businesses may have VAT staff occupied with other tasks or they may not have anyone and may need assistance for VAT compliance.
Such an occasion may require immediate measures for interim tax management to bridge the gap between acquisition and recruiting staff to perform the functions. VAT and other tax issues affect the company directly because of imminent tax deadlines and changing of the company’s objectives.
Interim roles are necessary to enable a company adjust before running their own tax team. Interim VAT management may require a senior professionals team because the role being filled is high profile and strategic. This may cost the company but the long term assurance of getting the right people employed is worth it.
Challenges of VAT Management
The process of managing VAT is a complex one that comes with several challenges. Identifying the exact challenges you are going through can help you address them, lower costs and reduce disruptions. This results in successful VAT implementation.
Challenges are, inability to maintain accurate documents for tax recovery and applying incorrect codes when accounting for input tax. Lack of technology support and absence of an integrated, comprehensive database and VAT processing solution. A lack of audit trail for VAT calculations and lack of compliance with existing tax laws.
The Aberdeen Group identified four top challenges faced by businesses. Almost half of the organizations were unable to comply with the dynamic tax rates. Several others lacked a standard workflow pattern when it came to managing tax.
Some organizations mentioned difficulties in accessing tax laws. Others explained that their business partners and suppliers had differing data formats for tax.
Losing an opportunity for improved VAT management holds back business growth and results in reduced cost-effectiveness. These are numerous things you need to know to succeed in managing VAT. This is to help start you off.