Managing Indirect Taxes In The Supply Chain

Managing indirect taxes in the supply chain: supporting growth and reducing cost

What we are seeing around the world

In recent years, a combination of world events, the global economic crisis and rapid advances in technology have wrought radical changes in international trade. Few global companies today do business in the same way or in the same places as they did even five years ago. They are extending their reach into new markets and seeking to thrive in developed economies by operating more effectively and efficiently. These developments are having profound effects on global supply chains — changing how and where materials and products are sourced, manufactured, distributed and sold.

Indirect taxes — such as VAT/GST, customs and excise duties — are typically based on trade flows and transactions, not on profits or income. As such, they are inextricably linked to supply chain activities. Changes in the ways companies are doing business are having a profound impact on these taxes. Equally, changes in these taxes may have a profound effect on companies’ supply chains, influencing where activities are carried out, the cost of finished products and delivery routes and timing.

Increasingly, companies recognize that effective management of indirect taxes, grants and incentives is essential to support growth and reduce the costs and risks of doing business internationally.

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