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Thursday, September 02, 2010
Thursday, September 02, 2010
Latest Procurement News
Posted: Wednesday, December 16, 2009, 9:05AM
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KNOWLEDGE MANAGEMENT TAGS
"Governance"
Senior execs expect US VAT within five years
More than half of senior US business executives expect some type of federal value-added tax (VAT) to be introduced within five years.Acknowledging the need for additional revenue to help address the "growing chasm" between the country's existing revenue flows and its built-in expenditure obligations, 57 per cent of the executives in a new Tax Governance Institute (TGI) survey said they believe VAT legislation will be introduced in the United States within five years, while 18 per cent expect it within 10 years.
"The survey responses underscore a recognition that the short- and long-term outlook for the US fiscal deficit is bleak unless some combination of spending cuts and additional revenue is implemented within the next decade or sooner," said Hank Gutman, KPMG tax principal and director of the Tax Governance Institute, and former chief of staff of the US Congressional Joint Committee on Taxation.
"The United States is the only G20 country without a federal VAT or Goods and Services Tax. The executives we surveyed clearly believe that VAT legislation is likely to be proposed as a means to raise much-needed revenue to reduce the deficit," Gutman said.
When asked to identify the biggest challenge they foresee for their companies if a VAT is adopted in the United States, 24 per cent of the executives cited compliance-related issues, according to the TGI survey. Other executives saw major challenges in data collection and analysis (18 per cent), management and monitoring (16 per cent), and tax technology software system changes (16 per cent).
"Executives are wise to focus on compliance. VAT touches many different parts of the supply chain, and tracking and collecting all the required information is critical," said Tom Boniface, partner-in-charge of KPMG LLP's VAT practice.
"To help ensure VAT compliance, many companies will need to deploy new VAT software or update existing platforms to properly manage the requirements of a new US VAT regime. If not implemented correctly, this could result in incorrectly calculated and remitted VAT amounts and potentially significant liabilities for the company."
According to the TGI survey, 34 per cent of executives said their companies would need 12-18 months to prepare for compliance with a US VAT. Twenty-one per cent said they would need two years or more.
Procurement Tags - Governance, U.S.
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