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Value Added Tax (VAT) impacts activities and functions across a business. Most businesses aspire to maintain a control structure that ensures VAT is effectively managed on a timely and consistent basis; however, this is not always possible. Finance and tax personnel frequently play catch-up to help the business meet its obligations without undermining the business objective.
VAT consulting seeks to support the current and future plans and activities of a business as well as advise on remediation tasks when something occasionally goes wrong. With 170 countries around the world operating a VAT-type system, it isn’t easy for businesses to stay on top of all their reporting obligations.
VAT consulting can function at the transactional level, helping determine individual VAT liability and compliance requirements, or at an enterprise-wide level, addressing macro issues regarding risk, opportunity and efficiency.
At RSM, we’ve developed a methodical approach to assisting businesses in assessing their current VAT operations and developing improvements that manage risk, recover cash or improve controls. We refer to this as our VAT Comprehensive Opportunity Review (VATCOR). VATCOR takes an enterprise-wide view of structure, supply chain, systems and compliance processes and provides an assessment with actionable intelligence.
In addition to supporting day-to-day global business activities, we possess deep experience in advising on the end-to-end life cycle of a corporate transaction, including entity purchases, trade and business assets (or a combination), from the buy side or the sell side.
Managing VAT in a corporate transaction requires careful planning and execution to avoid unnecessary VAT expense on the value of the transaction or the costs incurred to facilitate it.
Average VAT rates, currently ~20%, can become a significant burden on working capital. Planning to reduce the instance of VAT reduces the borrowing requirement or demand on available cash. VAT reduction planning may be needed on the transaction itself to avoid unnecessary VAT charges: e.g., if a business is acquired as a going concern or on incurred costs associated with the transaction (such as professional services).