Managing The Multinational Indirect Tax Burden

Managing The Multinational Indirect Tax Burden

For MNEs wishing to improve the levels of efficiency, control and value in this area, the issues for consideration are many and diverse.

The multinational indirect tax burden

While MNEs are increasingly being challenged to meet their multiple obligations for VAT, GST and other transactional taxes around the world, they typically have limited resources who fully understand the obligations and how to meet them.

Globally, indirect taxes to be managed are diverse and may include VAT, GST, other federal and local sales and business taxes, customs duties and excise taxes. No matter whether they are structured globally, regionally or otherwise, MNEs’ finance, tax and legal functions may struggle to understand and control this wide range of indirect taxes due to their local nature and tendency to quickly change as governments increasingly use them as a policy tool.

Managing VAT/GST globally

Despite very real obstacles, MNE taxpayers can significantly improve their indirect tax performance in all phases of the tax life cycle (tax planning, tax accounting, tax compliance and controversy) through better management of their indirect tax function.

Advances in technology and process capabilities are providing opportunities that were not available even just two or three years ago. These new capabilities allow MNEs to strike a better balance between efficiency, control and value in managing indirect taxes. As MNEs increasingly undergo financial transformation (which may include enterprise and resource planning (ERP) system implementations, rationalization projects, changes in tax or financial management and the adoption of a global compliance and reporting framework it provides a rare opportunity to bring indirect taxes “into the fold.”

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