Different countries have different tax laws and regulations. In addition, the laws are constantly changing and, as a business owner, you might find it hard to keep up with the necessary tax information. Due to this and other discrepancies, a business involved in businesses either outside the country or with international entities may find it difficult to file a foreign VAT reclaim.
Processing foreign VAT requires due diligence and coordination between various government tax agencies and departments. As a result, doing your foreign VAT manually can easily result in errors. This has necessitated the creation of VAT-processing applications that make it easier for you to reclaim your foreign VAT.
The Complex but Important Process of Foreign VAT Reclaim
Companies that are involved in local businesses only can easily recover VAT they have been charged with expenses such as car rental, promotional activities, and accommodation. Companies whose businesses are abroad getting foreign VAT invoices on these expenses but the process of reclaiming the foreign VAT is not as easy as for domestic companies.
Foreign VAT reclaim is made difficult by the complexity of laws involved. Since the different countries have different and evolving tax laws, it is difficult for companies to identify what expenses they can reclaim their taxes on. As a result, some are losing on a lot of money they can legally reclaim through VAT recovery.
Technology to the Rescue
Over 70% of the VAT is not reclaimed in the United States and Europe. Of those that try to reclaim, up to 25% of the VAT reclaims are reported to be erroneous and most of the errors can be attributed to manual VAT documentation. Other companies do not file a VAT reclaim either because they are ignorant or find the process too tedious thus opt not to bother.
The manual foreign VAT recovery process may be tedious to do but with VAT rates as high as 27%, opting not to reclaim could cost your company a lot of money. However, the complexity of the process is also not an excuse. There are now applications that coordinate with your company and tax authorities make the process much easier.
There are also applications and online agencies that can conduct the entire process for your company. All you need to provide authorization to your company’s invoices and they will get your foreign VAT reclaim process.
Your company could be losing a lot of money in form of an unclaimed foreign VAT. If you have been shying from filing your reclaim because you find the process exhausting, technological applications can be of assistance to you.
The process of recovering foreign VAT is time sensitive yet requires precision in handling the data. Technological applications ensure that your documents are processed accurately and also in time. However, you have to be careful while shopping for the application because some are not so accurate and may lead to the same errors that may be caused by manual filing.