Importance of Indirect Tax in the Supply Chain

Transactional taxes impact every stage of the supply chain. For most multinationals, the amount of Indirect Tax that needs to be identified, captured and controlled as it flows through the supply chain will significantly exceed the group’s liability to other forms of taxation.

In the last years a combination of external regulatory factors and changed operational priorities has resulted in a significant increase in Indirect Tax risk.

Local tax authorities are pursuing revenue assurance and anti-avoidance strategies that place an increasing compliance burden on organizations involved in cross-border trade.

At the same time, the drive towards value-optimised procurement and distribution functions – often on a regional or global basis – has added greater complexity to transactional reporting obligations.

A single operational failure in the systems and processes that manage the flow of Indirect Taxes through the supply chain can have significant consequences in terms of additional assessments, penalties, blocked VAT refunds and delayed payments from customers.