"No corporation wants to pay egregiously high fines or risk a government audit for violating sales tax laws. Outsourcing has become a good way to make sure someone knowledgeable is keeping up with the confusing welter of laws for companies doing business in more than one locale. Service providers also have the technology to calculate and monitor the tax faster and more accurately. "Day-to-day tax management is a non-strategic activity that diverts staff focus," says Patrick Grogan, Director of Marketing for Sabrix, which is part of Thomson Reuters Tax and Accounting." Read the full article in the August 2010 Issue of Outsourcingcenter
In an earlier post, I discussed the state of Georgia’s decision to not host a sales tax holiday in August 2010. In light of this, some retailers have come up with their own solution.
Albany’s JC Penney is hosting a tax relief sale in which all items will be marked down to what they would have cost the consumer, had the sales tax holiday occurred. They hope they will still see the increase in sales that occurs when the sales tax holiday does occur.
The JC Penney sale runs from 29 July 2010 to 1 August 2010.
Learn how the latest release of the Sabrix Integration for Oracle 12 enables companies to quickly deploy a fully automated tax solution with SAS 70 certified tax research. Register now for the July 28th web seminar to learn more.
During this event, you will learn:
• How the Sabrix Application Suite supports Oracle customers with global transaction tax compliance
• How the Sabrix Integration for Oracle 12 facilitates and streamlines support for multi-country deployments by setting up one regime to rate flow per country.
• How Sabrix extends Oracle EBTax functionality with out of the box tax determination and calculation, tax rate logic and up to date SAS 70 certified tax research.
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In an article in the Financial Times’ electronic issue of July 15, 2010 Nikki Tait draws a connection between the EU Commission extension of the deadline for submitting 2009 company expenses from September 2010 to March 2011 and the failure of most EU Member States to comply with the Commission’s requirements to provide electronic means of submission of those expenses.
The article states that “A survey by the International VAT Association found that, by the electronic system’s January launch, only seven EU countries had fully working electronic refund systems. Fourteen either did not have working portals or only partially working ones, and it could not obtain information from a further six countries.” It goes on to say that “The association criticized the failure to conduct end-to-end testing of the IT system before it went live, and also the failure of countries to collaborate in building compatible portals – and cited Finland and Sweden as the only countries known to have worked together.”
The question now is will the extension by itself resolve the problem or should it be supplemented by stiff penalties imposed on non-compliant governments to be used to some extend in helping industries where companies have been extremely badly affected.
To continue updating you on VAT rate changes in the EU, Romania is the latest EU state along with Portugal, Spain, Greece, Finland, and the UK that has decided on increasing its VAT rate. To comply with the conditions of the joint aid package from the International Monetary Fund, the European Commission, and the World Bank, effective July 1, 2010 the standard VAT rate will increase from 19% to 24%. I trust that other EU Member States may follow in the near future. I have my eye on the Czech Republic. Do you think that there is a trend in increasing the VAT rates in the EU? Do you think that the EU will increase the upper limit of 25% in the next 24 months?
Learn how personal computing giant, Lenovo, increased transaction tax accuracy and automated tax rule changes around the world with SAP and Sabrix solutions. Finance transformation expert, Dennis Culin, Director of Business Transformation at Lenovo, discusses best practices for achieving transaction tax compliance and finance operational excellence.
Register for the June 30th Webcast Here
Register for the June 30th Webcast Here
In the face of potential budget cuts, Dona Ana County Commissioners are considering putting a sales tax increase to vote. However, some southern New Mexico business owners have expressed concern over a sales tax increase in the current economic climate.
The County has noted that sales tax hikes are generally unpopular. However, they also note that budget cuts are unpopular as well. The County Commission Chairman Oscar Vasquez-Butler has said that given the choice between raising new revenue and cutting back on spending, he favors the additional revenue option and supports putting a proposed sales tax increase to vote.
Source:
www.newswest9.com/Global/story.aspIn January of this year in a blog titled “One month into the VAT package” I informed of the new electronic procedure adopted by the EU Member States on January 1, 2010 on processing VAT reimbursement claims. This is what I wrote:
“Also, from 1 January 2010, the current procedure for reimbursement of VAT incurred by EU businesses in EU Member States where they are not established will be replaced by a new fully electronic procedure, thereby ensuring a quicker refund to claimants. The current paper-based procedure is slow, cumbersome, and costly. It also lacks in legal certainty. The new procedure will better facilitate businesses and improve the functioning of the internal market. A new feature is that businesses will be paid interest if Member States are late making refunds. Will all the requirements be applied uniformly in all EU Member States, will the procedure work, and will that lead to an increase in claims that were in many cases deemed to be not worth filing for?”
The International VAT Association (‘IVA”) that represents businesses and advisors involved in VAT worldwide recently provided the following assessment of how the EU VAT refund system is performing. As it addresses my questions I am providing the link to you:
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100527005123&newsLang=en
Please use this space to share your experience and comment on the situation.
From the beginning of 2010 the total indirect tax rate changes in our international practice (outside the US) were approximately 40, which is consistent when compared with the changes made in the same time period last year. Predominantly, the trend has been for governments to increase the rates of indirect taxes as a source of reliable revenue. For example nine Indian States have increased the VAT rates since the beginning of 2010. Indonesia has increased the maximum rate of the luxury tax to 200% and Canada’s province of Nova Scotia will increase its provincial component of the HST to 10% on July 1. 2010. Many more are planning increases including Panama, Belize, New Zealand, and Quebec, Canada.
While there is a general trend to increase the VAT worldwide, there seems to be disunity in Europe. Some European states are relying on higher VAT rates to shore up its budget deficits. The most notable increase in the VAT rate has been in Greece where the rate has jumped from 19% to 21% and on July 1, 2010 it will rise again to 23%. Iceland presently has the highest VAT rate at 25.5% of all existing and aspiring EU Member States after its economy wielded to the global financial crisis. Other European states that saw increases in the VAT rates in the first half of 2010 were Belarus and Moldova. In July of 2010 Finland will increase its VAT rates with a single percentage. There are calls for VAT rate increases in Spain, Portugal, Latvia, and Switzerland. It is likely that by the end of this year or early 2011other European countries will increase their VAT rates.
At the same time some European countries are bucking the global trend, choosing to not increase the VAT or even lower some VAT rates as a fiscal stimulus to their economies. In the first half of 2010 Germany, Ireland, Belgium, Hungary, and Slovenia saw targeted decreases of VAT specific to certain product taxability.
Other European countries have gone back and forth on their VAT rate several times. Bulgaria’s government for example has committed to lowering the VAT rate in principal, however due to immediate budgetary constraints may temporarily be forced to increase it, instead. Latvia and Romania seem to be caught in the same dilemma between budgetary deficit constraints and economies that need stimulating.
San Ramon, CA, May 18, 2010 — The Tax & Accounting business of Thomson Reuters today announced that Sabrix has been awarded a 2010 SAP® Pinnacle Award in the “Software Solution Newcomer of the Year” category. SAP Pinnacle Awards are granted to leading SAP partners that have excelled in enhancing the customer experience, addressing critical issues such as accelerating co-innovation and improving return on investment. Winners were selected based on over 230 nominations in 27 categories received from partners and SAP employees. Sabrix received the award at a special awards ceremony held on the eve of SAPPHIRE® NOW, SAP’s international customer conference being held in Orlando, Fla., through May 19. Read more on this exciting news here!
I love my job because I get to work with different companies. My job is to help them build a sound sales and use tax foundation. I often hear many of these companies are surprised to learn how complex this foundation can be. That's because the process sounds simple: take an item cost and apply a sales tax rate to it. Then you calculate the sales tax and add it to the invoice. Boom - you're done, right? I wish it was so, but NO!
Let's use an analogy of building a house. In many ways building a solid sales tax and use tax foundation is as complex as building a house. While a house is a simple concept, there are millions of pieces in it. These pieces range from big things such as roof beams, to siding, to flooring, to little things like nails, screws, shims, etc. This is the same as building a solid sales and use tax foundation. It starts with big pieces like accounting systems, business processes, item descriptions, cost, to little pieces, like ship to addresses, ship from addresses, customer exemption, invoice structure, contract relationships, etc. Wow, I could go on forever.
In order to build a solid sales tax and/or use tax foundation, you have to focus on all of the pieces. You can't leave anything out. If you do, your tax foundation could crumble. It would be like a house built without nails; it, too, will crumble. That's why I spend a lot of time understanding your sales tax and use tax needs. I also focus on the business structure and internal processes. I ask a lot of questions, so that we can build a solid foundation that will hold up no matter what the weather may be!
San Ramon, CA, May 12, 2010 – The Tax & Accounting business of Thomson Reuters announced today availability of the latest version of the Sabrix Application Suite, the company’s on-premise, global transaction tax solution that seamlessly connects to all financial applications required for the determination, calculation, and recording of transaction taxes. Read full press release HERE.
Earlier this month, lawmakers in Vermont passed a bill which applies the state’s six percent sales tax to vitamins and supplements, unless they are prescribed by a doctor. The bill has proved controversial, with protests from groups like the Vermont Community for Elders and Planned Parenthood, as well as Governor Jim Douglass. The opposition feels there are better ways to deal with the state’s budget deficit, such as taxing soda. The sales tax on vitamins would raise an estimated$1.3 million annually. The bill is currently being reviewed by the Senate.
Sources:
http://www.wcax.com/Global/story.asp?S=12305792
http://www.therepublic.com/view/story/3f863cf7ebb1436abc873f0dc4dec1c5/VT--Taxing_Vitamins/
http://www.naturalproductsinsider.com/news/2010/04/vermont-senate-reviews-house-proposal-to-tax-supplements.aspx
San Ramon, Calif., March 18, 2010 – The Tax & Accounting business of Thomson Reuters has now integrated its latest version of the Sabrix Application Suite with Oracle E-Business Suite Release 12. Building on previous integration support for Oracle 12, this latest solution provides the broadest support for global transaction tax management covering sales, use and value-add tax (VAT), across order-to-cash and procure-to-pay processes for multi-national companies. Click here for the full press release.
San Ramon, Calif., Feb. 16, 2010 – The Tax & Accounting business of Thomson Reuters announced today availability of two new online services – Taxcast International and Ask the Expert Webinar – to help businesses stay abreast of the latest sales and use tax and value added tax (VAT) changes. Read the full article.
As of January 1, 2010 EU Member States have agreed to implement significant changes to their VAT regimes collectively known as (the "VAT Package"). The VAT Package introduces some of the biggest changes to the EU VAT system in recent years. It is split in 3 main areas:
This change is intended to standardize and simplify the accounting for the VAT imposed on the majority of services. It also, brings a level playing field to businesses supplying services throughout the EU so, they no longer feel the need to locate in jurisdictions with lower VAT rates.
Will the above benefits justify the change or will they be over weighted by the increased compliance costs to VAT exempt businesses brought on by the reverse charge mechanism and the new compliance requirements? The answer may not be simple and in many cases may depend on the industry you are in.
Also, from 1 January 2010, the current procedure for reimbursement of VAT incurred by EU businesses in EU Member States where they are not established will be replaced by a new fully electronic procedure, thereby ensuring a quicker refund to claimants. The current paper-based procedure is slow, cumbersome, and costly. It also lacks in legal certainty. The new procedure will better facilitate businesses and improve the functioning of the internal market. A new feature is that businesses will be paid interest if Member States are late making refunds. Will all the requirements be applied uniformly in all EU Member States, will the procedure work, and will that lead to an increase in claims that were in many cases deemed to be not worth filing for?
The above questions are of great interest to us. If you would like to share your experience, please provide a comment and if you have any questions please feel free to contact us here.
- changes to the place of suppy rules for B2B services;
- changes to the cross border 8th directive refund claims procedures; and
- new compliance requirements.
This change is intended to standardize and simplify the accounting for the VAT imposed on the majority of services. It also, brings a level playing field to businesses supplying services throughout the EU so, they no longer feel the need to locate in jurisdictions with lower VAT rates.
Will the above benefits justify the change or will they be over weighted by the increased compliance costs to VAT exempt businesses brought on by the reverse charge mechanism and the new compliance requirements? The answer may not be simple and in many cases may depend on the industry you are in.
Also, from 1 January 2010, the current procedure for reimbursement of VAT incurred by EU businesses in EU Member States where they are not established will be replaced by a new fully electronic procedure, thereby ensuring a quicker refund to claimants. The current paper-based procedure is slow, cumbersome, and costly. It also lacks in legal certainty. The new procedure will better facilitate businesses and improve the functioning of the internal market. A new feature is that businesses will be paid interest if Member States are late making refunds. Will all the requirements be applied uniformly in all EU Member States, will the procedure work, and will that lead to an increase in claims that were in many cases deemed to be not worth filing for?
The above questions are of great interest to us. If you would like to share your experience, please provide a comment and if you have any questions please feel free to contact us here.
As of December 2009 Content, new product taxability rules utilizing the Harmonized Product Group ("HPG") are available for Canada GST/HST, QST and PST purposes. SABRIX has informed its customers in more detail about the Canada HPG tree in a number of Content release letters. Despite the advantages that the HPG offers most customers are either planning to move to the HPG in distant future or not planning to move at all. I have summarized below the major advantages of the Canada HPG with a hope that this will provide some clarity to you and at the very least will instigate a conversation.
The HPG is based on the Harmonized Commodity Description and Coding System. This system is recognized officially by many countries authorities including the Canada Revenue Agency. Where you are moving goods cross a border you will find it easier to use officially recognized product descriptions and codes.
In addition, the HPG is used for other jurisdictions in Sabrix such as the European Union. Sabrix has already transitioned the Australia and New Zealand authorities from the Independent Product Group to the HPG. Therefore, the Canada HPG will provide a natural continuation that is in line with the global trend.
The Canadian HPG not only provides more products but the products and product groupings are far less ambiguous. To preserve this we will generally not be adding or supporting any products other than what is officially required in the HPG. In the past we have been adding to the Canadian Independent Product Tree products and groups rather loosely which has led to misunderstanding as to what the difference may be between car renting and car leasing for example. With Canada moving to the HPG this situation is unlikely to happen.
While we will be maintaining the Independent Product Tree you will be better served to move to the HPG as at some point in the future we will likely start maintaining the HPG exclusively. This is not likely to happen now but you will be wise to start planning your move now.
Planning is important because there are some costs involved to some more than to others depending on your business. However, the HPG does not contain any services so you will have to add those if necessary. Also, you will have to analyse the extend to which you will need to remap your existing products. As this may be time consuming you will need to prepare and inform us as we may be able to help.
Now I would like to leave it with you to provide any questions or comments.
(NYSE: TRI;TSX: TRI) -- Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today announced that its Tax & Accounting business has completed the acquisition of Sabrix, Inc., a leading global provider of transaction tax management software applications and services. Read press release here.
SAN RAMON, CA – December 9, 2009 – Sabrix, Inc., a leading provider of transaction tax management for companies of all sizes, today revealed a sampling of 2009 quirky sales and use tax changes, emphasizing the importance of technology and expertise to help navigate the dynamic sales and use tax landscape. Read the full press release here.
SAN RAMON, CA – November 12, 2009 – Sabrix, Inc., a leading provider of transaction tax management for companies of all sizes, today announced the availability of the Fall 2009 version of Sabrix Managed Tax Service (MTS). Read the full article here.
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