New figure proves complex reclaim procedures are problematic for time-poor businesses
COMPANIES are losing out on $20bn globally in unclaimed VAT, research by recovery experts, VAT IT reveals today.
VAT IT, the global leader in cross-border VAT recovery, underlines the figure is largely due to the complex and time consuming European rebate system, resulting in businesses not claiming back money that is rightfully theirs.
The company says the global figure is a result of more than one-fifth of companies who incur VAT in foreign countries claim they are unable to recover it, due to procedures being too complex and burdensome.
Global business travel is worth $1.4trillion, with 5% relating to reclaimable VAT. Industries such as engineering, pharma companies and IT firms are among the worst affected, as well as large companies with complex global structures.
VAT IT has argued that the eye-watering figure is serving to restrict company growth and investment.
VAT IT’s European Managing Director, Ann Jones, said “Companies are effectively leaving fortunes in the hands of overseas treasuries which they could – and should – rightfully reclaim. This is money that bosses have said goodbye to, but which could be reinvested across businesses. Much of the reason for this is down to nothing more than a lack of knowledge and the difficult-to-manage reclaim procedures designed to hinder – not help – companies in this process.”
“These problems extend across Europe, USA, Africa and Asia. Of course, foreign governments do not wish to give up VAT so easily, so firms must step up to the plate themselves. The findings come at a time when cash flow issues are becoming increasingly problematic for UK companies, as the impending exit from the Single Market and Customs Union creates increasing financial uncertainty.”
VAT IT’s recent acquisition of Meridian VAT Reclaim, from Meridian Global Services, has brought together the expertise of the two largest VAT recovery specialists globally. The group, which combines the expertise of its international consultants with a tech-driven recovery solution for clients, now has the largest global footprint in the industry with 45 offices worldwide, servicing clients in over 110 countries in 53 languages, including De Beers and Ericsson.
CEO of VAT IT, Brendon Silver, said: “Reclaim procedures are long, complex and time consuming when undertaken in house but this isn’t just a bureaucratic issue, there’s a shift that needs to be made in the general attitude businesses have towards their tax reclaims. In our 30 years of business, we have seen that despite the directive stating that any refund due must be made within six months of the date of submission, many administrations do not respect this deadline. It becomes clear that when some companies wait up to two years to receive a refund, they are simply just putting off claiming in the first place.”
On the acquisition, Mr Silver added: “Following the acquisition of Meridian, we have already moved all clients over to one single technology and service platform, the VAT Cloud, which has allowed our clients to integrate with Enterprise Resource Planning and Travel Expense Management systems seamlessly. In terms of future benefits, we are already seeing increase in VAT yields for clients because of the new technology and service structure that has been implemented and believe this will continue.”
For 2018, VAT IT’s aim is to automate as much of the process as possible, hone in on the 30 years of industry expertise and technical ability in the company and overhaul the industry to ensure refunds are received to those businesses that are owed it.