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Elevate Your VAT Control Framework to the Next Level

  • Richard Cornelisse
  • YouTube Videos of KGT products and services
  • 23 April 2025
  • 5

Enhance your VAT control framework by using a KGT-developed normative framework to identify areas for improvement and ensure strong compliance.

A solid tax control framework offers benefits such as;

  • Insights into VAT risk vulnerabilities
  • Clear definition of acceptable risk levels
  • Implementation of controls for significant risks.

A VAT Control Framework is an internal control tool for a company's tax function, integral to its overall business control framework. It identifies, mitigates, manages, and reports on VAT risks to ensure compliance with tax laws and accurate reporting while managing risks within the company's appetite. A robust framework prevents VAT errors and identifies opportunities.

A company's VAT control framework is adequate if it highlights potential VAT risks and fosters awareness. Organizations should define risk tolerance, implement control measures, and regularly review VAT risks, likelihood, impacts, and mitigation strategies. Assessing risk appetite and measurement is also essential.

The following gaps raise significant benchmarking concerns:

  • Inability to Comply with Local VAT Rules: Non-compliance arises from insufficient resources, local expertise, clear policies, and effective monitoring.
  • System Incompatibility: Issues with master data can disrupt tax determination logic, leading to non-compliance and manual fixes.
  • Undefined Processes: Lack of clear internal guidelines and communication with tax offices increases error risks.
  • Inadequate Documentation: Training often neglects indirect tax guidance, leaving staff unprepared.
  • Insufficient Communication: Poor coordination between the indirect tax function and other business units complicates the resolution of VAT issues.
  • Lack of Compliance Controls: A solid VAT control framework with performance metrics is crucial for compliance; a well-structured indirect tax function can provide significant benefits.

Automating VAT processes reduces manual effort and errors, allowing tax staff to focus on strategy and problem resolution. A strong tax function balances consistent operations with flexibility for growth and compliance. By evaluating risks and rewards, companies can streamline VAT functions and create effective migration structures.

How Can KGT Provide Support?

KGT assists clients in establishing a strong VAT control framework. Our standardized tax control framework lets you assess your situation and identify gaps. We then provide recommendations for standard controls to address these gaps as needed. This framework has been developed in collaboration with VAT function leaders from multinational companies, ensuring a comprehensive understanding of your challenges.

KGT is an SAP partner for PE services and an SAP Build partner, and to become an SAP partner, strict due diligence requirements must be met, including having certified SAP consultants. You can find us at: https://partnerfinder.sap.com/profile/0001925409