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95% Of Procurement and Finance Professionals Struggle to Track VAT Changes Due to Tax Landscape

Vertex, Inc., a global provider of tax technology solutions, announced key findings from research that revealed 95% of procurement and finance professionals struggle to track VAT changes due to the increased complexities of the evolving tax landscape. These constant changes to global indirect tax requirements hinder international trade transactions and increase the risk of audit failure.

Joint research conducted by International Tax Review (ITR) and Vertex looks at the issues surrounding accurate indirect tax determination for companies with cross-border supply chains and draws on a global, multi-industry survey of approximately 1,000 senior executives from the tax, finance, procurement and information technology functions. The study also included in-depth interviews with corporate tax leaders and other experts.

According to respondents, the inability to correctly track VAT changes interferes with a global organisations’ ability to remain competitive despite eight out of ten businesses taking steps to improve agility in their procurement processes in response to ongoing supply chain disruption.

Insufficient levels of automation cause headaches for businesses looking to stay on top of ever-changing indirect tax rules and regulations and as a result, two-thirds of respondents report that they are concerned that tax determination issues would be uncovered in their procure-to-pay system if an audit was conducted next week. This is no surprise considering 16% of those surveyed claim the tax department is not involved when evaluating a procurement solution.

Where procurement and tax management cross paths (master data and vendor setup; requisition and purchase order; goods receipt; invoice verification; and invoice posting), inaccuracies caused by confusion over indirect tax determination or calculation can potentially lead to serious consequences such as economic costs, fines, reputational damage with customers and suppliers – and in extreme cases the whole business could be forced to a halt.

Effective indirect tax management for audit success

93% of businesses using a tax engine achieve audit success compared to companies that just rely on ERP systems for tax determination.

This, combined with cross-functional relationships between procurement, tax, accounts payable and IT, as well as the right organisational processes, help to future-proof the business in a volatile and competitive market.

“Supply chain fragility, digital demand, and an evolving tax landscape has changed the state of play, making agility the new business currency. Yet, indirect tax determination remains a serious problem, with many businesses either using valuable time to monitor tax changes or unaware of the mistakes being made within processes,” states Vertex Director of VAT Peter Boerhof.

Indirect tax is an important part of procurement, and many companies already use automation for procurement processes, but in order to handle the complexities required of today’s indirect tax rules, adopting a tax engine can ease this burden and put businesses in the best position to address these challenges.

The International Tax Review report commissioned by Vertex surveyed just under 1000 senior executives in procurement, tax, accounts payable and IT, working for companies with annual revenues between £150 million to in excess of £200 billion.

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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