Businesses Lose Billions in Unclaimed VAT Every Year
An OECD study has shown that nearly 21% of businesses are actually unable to recover any of the cross-border VAT they incur on business expenditure. This is due to complicated reclaim policies and a minefield of onerous procedures. Most businesses simply don’t have the internal resources or infrastructure within their finance teams to deal with the heavy administration process of claiming a foreign VAT refund, what with the need to collate thousands of invoices, expense forms and expense data for every cross-border refund request.
Moreover, even if a European company uses the more streamlined, paperless EU VAT directive, the process of claiming back cross-border VAT still requires the specific legal knowledge of over 28 jurisdictions. Every country that offers a VAT refund system, has its own regulation, legislation and deadline. Add the language barrier and you can see why so many companies don’t even begin the process.
But in a volatile and competitive market, can a company afford to forego these refund opportunities? When $20bn is owed to companies across the world in unclaimed VAT, one needs to ask themselves, how much of it belongs to them?
It’s never been more important than now to secure a consistent cash flow to your bottom-line. It’s essential that businesses are aware of the capital that is at stake and understand that it’s money that can make a considerable financial difference to a business, be it an SME or large corporation. CFOs need to address VAT leakage as a priority despite its complexities.
With the introduction of cloud-based expense management platforms and integration opportunities, the cumbersome process of VAT recovery has been made somewhat easier and specialist VAT reclaim companies are making advances in technological development to facilitate paperless, automated reclaim.
Such is the complex and time-consuming nature of these procedures, many of the bureaucratic processes are now performed by cloud-based reclaim platforms. VAT IT’s VAT Cloud for example, automatically connects your expense management system to the relevant tax portals, in accordance with EU Refund Directive VAT reclaim legislation.
In addition to tech solutions, a VAT reclaim company takes care of the VAT authority negotiations on your behalf. These third-party organisations are equipped to deal with the bureaucratic procedures and armed with specialist knowledge and software that gets the process done far more efficiently than a company could on their own. Working with a vat reclaim agent also ensures 100% VAT compliance at all times while preserving your company’s resources.
While there is a growing number of CFOs and Finance Directors taking advantage of foreign and domestic VAT reclaim opportunities, many more businesses are losing thousands every year. With the right VAT partner, the process can be made a lot simpler and add exponential value to a company’s bottom line.
About VAT IT
VAT IT Group is at the centre of a massive and complex industry and has earned the reputation as a trusted, world leader in the provision of tax reclaim and compliance. Leveraging their proprietary software and cloud-based platforms, VAT IT delivers their premium service to over 13,000 clients including large multinationals and fortune 500 companies. With over 40 wholly-owned branches worldwide servicing clients in 117 countries, VAT IT’s the largest firm of its kind on the planet. VAT IT also has a successful track record for launching additional products and businesses that address and solve industry pain points.