A new survey by Thomson Reuters found a perceived increase of 80 percent in audits of indirect taxes such as value-added taxes.
The survey polled 50 finance and tax leaders representing leading global companies on their indirect tax and value-added tax processes along with current market conditions.
Despite the perceived increase in audit activity, however, less than half of companies (48 percent) automate the entire indirect tax process, from tax preparation to remittance and recovery, the survey found. The automation process is a critical component of achieving best-in-class indirect tax performance, according to a report in January by the Aberdeen Group. In addition, Aberdeen recommends that companies centralize management of their tax information and establish standardized procedures for managing government audits.
“As government continues to rely on indirect tax and VAT to address their budget shortfalls, businesses, more than ever, need to implement best practices to mitigate the skyrocketing costs associated with complying with the dynamic indirect tax landscape,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “Based on the survey findings, more than half of the companies simply need to use technology to automate the entire indirect tax workflow process to achieve best-in-class performance and compliance.”
The Thomson Reuters survey also found that 34 percent of the respondents have seen an increase in penalties and fines, while 75 percent have centralized management of their tax information and 63 percent have standardized their procedures for managing government audits.
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