Taxback International finds that about 60% of businesses are filing domestic VAT returns incorrectly
More than half of companies that qualify to file domestic VAT returns are missing out on cash flow streams due to not fully completing domestic VAT returns or not doing so correctly.
KILKENNY, Ireland, Oct. 14, 2020 /PRNewswire-PRWeb/ -- Domestic VAT reclaim explained
Domestic VAT reclaim is the the term used for the return of VAT on domestic travel and expense (T&E) transactions. Hotels, accommodation, meals, entertainment etc. are considered travel and expense transactions and is usually reclaimed on a monthly or quarterly basis and can provide regular cash flow into your business.
Many countries also permit you to reclaim backdated VAT on local business spend. And in some of those countries, businesses can reclaim up to 5 years. Despite this fact, many companies fail to reclaim domestic VAT due to the complex nature of the reclaim process which is compounded by the high risk of getting it wrong.
60% of organisations submit VAT returns that are non-compliant
The findings of internal research by Taxback International found many companies are making incomplete or incorrect Domestic VAT submissions to their local tax office.
Substantial revenue is being lost due to companies incorrectly reclaiming domestic VAT or not including all eligible receipts.
Four consistent issues emerged when Taxback International examined the reasons for this, including:
1. Deducted domestic VAT was not valid and was therefore non-compliant with Tax Office laws.
2. As a result of domestic VAT being incorrectly deducted and ineligible, companies were reclaiming a high amount of ineligible VAT.
3. Eligible domestic VAT was not deducted resulting in a loss in the reclaim for the company.
4. Several smaller expenses were overlooked as they were regarded as too difficult to reclaim on or there was a shortage of resources within the company to manage the amounts of these small transactions.
Altogether more than 60% of companies were found to be submitting non-compliant domestic VAT returns and were therefore risking fines from the Tax Office and even Tax Audits.
Taxback International is a company with more than 20 years of experience dealing with all global tax jurisdictions and combines innovative technology, expertise and value added partnerships to deliver comprehensive VAT solutions to help businesses maximise VAT reclaim and minimise risks.
SOURCE Taxback International
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