Hyper-regulation and Economic Shifts Put Pressure on European Tax Departments

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Hyper-regulation and Economic Shifts Put Pressure on European Tax Departments

Speakers at Vertex’s Exchange Europe Conference discuss challenges and solutions for global indirect tax management

21/04/2011 — LONDON — (BUSINESS WIRE)

As the global economy recovers from the effects of a deep recession, the resulting economic shifts and hyper-regulatory tax environment has had a significant and lasting impact on companies’ tax departments. Speakers and attendees discussed these issues, as well as technological and procedural solutions at Vertex’s 2011 Exchange Europe Conference held in London, UK in early April.

This year’s keynote speaker was The Guardian economics editor Larry Elliott, who discussed how economic issues have put tax revenue generation pressure on both governments and corporations worldwide.

“The financial markets are doing the debt sums for countries on the periphery and coming up with some worrying answers,” said Elliot. “The result is these same markets are starting to send a clear message: the debt dynamics of certain countries are unsustainable.”

Chris Walsh, Chief International Tax Officer for Vertex Inc., commented, “While we are in the midst of an economic recovery, governments, individuals, and businesses continue to feel the impact from the global slowdown. This is particularly true in terms of sovereign debt and the resulting changes in tax policy, anti-avoidance activity and audit aggression. For companies with global operations, this has had a particularly strong effect on the tax department, which is tasked with dealing with a hyper-regulatory environment, ever-changing tax rules and even new tax types. Often times this is happening with staffing levels that have failed to keep up with the size of the tasks in hand.”

Walsh noted that, as governments at every level deal with budget shortfalls, the result has been thousands of tax changes, new regulations and a new wave of tax and accounting standards – or hyper-regulation. Given the nature of the world economy, hyper-regulation impacts global corporations regardless of where they are headquartered.

“Hyper-regulation reaches across European nations. It’s not reserved to a particular country or region, though each has its own set of challenges. When you look as the number of changes in tax that have taken place and at the rate at which they have come, it’s easy to understand why business tax professionals are looking for tools and procedures that help them keep pace while also offering relief from increasing workloads.”

Recent transaction tax changes impacting global companies:

  • In the UK and the Czech Republic, VAT “stimulus” rate decreases were reversed in 2010.
  • Further changes apply to the place of supply of some services in the European Union, as part of the EU VAT package implementation.
  • On 17 February 2011 the South African Minister for Finance indicated that legislation would be introduced to allow a Voluntary Disclosure Program (VDP) covering the period November 2010 to October 2011.
  • Vertex has calculated that for 2010 the U.S. had its largest average combined sales tax rate, along with over 500 new sales taxes or sales tax rate increases, as states, counties and municipalities sought to close significant budget deficits.
  • Brazil’s recent transaction tax amendments number in the hundreds impacting its 5,500 taxing jurisdictions.

“The good news is that hyper-regulation provides a compelling reason for companies to make technology and process changes that will benefit the tax department and the entire organization,” said Alan James, Director of Client Solutions for Vertex Inc. “These technology and tax process improvements will transform tax and help companies prosper in the long-term.”

Note: Additional resources regarding global hyper-regulation and its impact on the corporate tax department are available for download:

About Vertex

Founded in 1978, Vertex Inc. is the leading provider of corporate enterprise tax software and services worldwide.

Vertex helps companies realize the full financial and strategic potential of corporate tax, offering a variety of solutions that streamline, integrate and automate corporate tax processes. Vertex solutions serve multinational corporations in every major line of business tax including; income, sales, consumer use, value added, communications and payroll.

The company’s offerings are showcased by Vertex Enterprise™, a data-driven, open-architecture approach to tax technology that integrates all direct and indirect tax processes and technologies with host financial system applications on a single platform. The result is increased efficiency, control, transparency and strategic decision making for Tax and Finance departments.

Vertex is a privately held company that employs over 600 professionals across the globe, at its headquarters in the U.S. (Berwyn, Pa.) and offices in Europe (London), Brazil (Săo Paulo), Dallas, Fort Collins, Naperville, Phoenix and Sarasota.

For more information about Vertex, visit www.vertexinc.comFor more information on Vertex Enterprise™ visit: www.vertexinc.com/enterprise

CONTACT:

Press contact:Garfield Group Public RelationsAmber Lutz, 215-867-8600alutz@garfieldgroup.comorCompany contact:Vertex Inc.Paul Johnson, 267-645-9407paul.johnson@vertexinc.com

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