Research by Vertex has found a significant trend among global businesses regarding indirect tax compliance.
A staggering 74% of businesses surveyed are willing to accept risks in their tax compliance strategies.
This is particularly alarming given the availability of technologies to mitigate these risks. Peter Boerhof, Senior Director of VAT for Vertex’s Chief Tax Office, emphasizes the detrimental effects of improper tax compliance, especially in Europe where VAT rates can reach 27%.
The research, involving 580 indirect tax decision makers from companies with annual revenues over $50m, reveals a diverse attitude towards risk based on regional differences. In the U.S., 90% of respondents consider their businesses risk-prone, contrasting with only 56% in Southern Europe. Additionally, a significant 62% of these businesses have been publicly found non-compliant, either through government investigation or audit. This exposes a worrying trend of companies underestimating the financial and reputational damage from non-compliance.
Interestingly, despite the high-risk tolerance, 43% of U.S. respondents view their organizations as ‘champions’ in indirect tax capabilities, while only 29% in Southern Europe share this confidence. On the other hand, 25% of respondents from the UK and Ireland feel their compliance strategy is slowing down their business, terming themselves as ‘crawlers’.
Gunjan Tripathi, EMEA Director for Solutions Marketing at Vertex, raises a crucial point about the personal exposure felt by tax decision-makers due to the prevailing risk levels in their businesses. This sentiment reflects a broader concern about the duty of care in managing tax compliance risks.
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