Dealing with tax authorities on the hunt for revenues
The world of indirect tax is constantly evolving, particularly in an environment where tax authorities are targeting this area of tax for increased revenues. This was a topic of considerable discussion and debate today at the Taxand Global Conference in Milan.
Indirect taxation is an area in which has attracted increasing levels of aggression from tax authorities are taking increasingly aggressive positions around the globe. The indirect tax landscape is constantly changing, in part because many governments are seeking out new sources of
The indirect tax landscape is constantly changing, in part because many governments are seeking out new sources of tax revenues and – they have recognised that indirect taxes be a comparatively quick way of accessing revenues, hence the sharp focus on this area of taxation of late. Moreover, changes of administrative positions do not attract the same political pressures as would an increase in rates.
This new environment poses challenges both in terms of dealing with the tax authorities, whilst managing compliance and increased risk. Being compliant with all aspects of the current European VAT system will, however, in many cases be a challenge in itself since many Member States have introduced unilateral changes aimed at potentially fraudulent VAT schemes.
Managing indirect tax exposures are exponentially more challenging for companies carrying on business in multiple jurisdictions, which can mean even within one country or city. In China for example, companies can face difficult rules that vary in different regions and even in different parts of the same city.
Because of the high degree of complexity and inconsistency in VAT law and across indirect taxes in general, with thousands of different rules around the globe.
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Quality tax advice, globally
Taxand has the following advice for multinationals on the current indirect tax arena:
- It is imperative that high levels awareness towards indirect tax compliance be maintained, including regularly updating changes in all jurisdictions in which you carry on business
- The increased demand for tax revenues for the countries will lead to increased activity by the tax administrations and thus indirect tax planning will be even more complicated
- Regular contact with local indirect tax expertise is essential.
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