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How hard is it for businesses to comply with VAT/GST obligations around the world? In which countries is it optimized?
A new study has been released that yields significant global findings as to the relative compliance burden of Value Added Tax (VAT) and Goods and Services Tax (GST) around the world1. Using an exclusive VAT Diagnostic tool developed for the purposes of this study, UNSW Sydney has released a new comparative assessment2, which considers the compliance requirements and related administrative burden associated with adhering to local VAT and GST rules across 47 different jurisdictions.
The research concluded that 14 countries around the world score favorably overall, including Singapore, Australia, Costa Rica, New Zealand and South Africa, with a compliance burden index of 4 or less, while 15 countries were rated with a score of 6 or more, suggesting the need for policy and/or administrative reforms in those locations in order to help reduce the compliance burden — for taxpayers and for tax administrators. The study also suggests that governments and their tax administrations can learn from those jurisdictions where the compliance burden is rated more favorably. For example, by implementing technology solutions in order to help streamline processes.
Lachlan Wolfers, Global Head of Indirect Taxes, KPMG International says, of the study, “The findings highlight the importance not only of countries having the right VAT policies in place, but also the call to modernize the delivery of tax administration to support businesses in efficiently managing VAT compliance costs. Businesses are telling us that, as their compliance obligations are globalizing through the digitalization of business models, the ability to deal with tax authorities electronically in registering, invoicing and filing is becoming increasingly important.”
The UNSW research team intends for the diagnostic tool to be used by governments and tax authorities around the world to help them see variances and identify best practices that can help to reduce compliance costs and improve compliance. For example, recent initiatives such as Making Tax Digital (MTD) in the UK, Singapore’s Assisted Compliance Assurance Program (ACAP), as well as electronic invoicing, filing and registration systems all support taxpayers in efficiently managing VAT compliance costs, while at the same time enhancing the integrity of countries’ tax systems.
“We are pleased to support UNSW in their research as a part of our global Responsible Tax project, and believe it will be a valuable tool for tax authorities to assist in making the system more efficient, reducing the cost of collection and improving the compliance environment,” says Chris Morgan, Global Head of Tax Policy, KPMG International. “Ultimately, a more efficient system means less need to devote resources and investment to administrative compliance processes, which can benefit not only businesses and tax administrators but also society at large.”
The tool focuses not only on the VAT policy settings in place in any given country, but also on how the VAT system is administered in line with the needs of the community it serves. The compliance burden indicators were found to be influenced by four key factors at the country level, including:
- tax law complexity
- the number and frequency of administrative obligations
- revenue body capabilities to support taxpayers
- monetary costs and benefits.
Looking across all countries, the research finds that features of tax policy design, including reduced rates, exemptions, and registration thresholds, had a negative impact on taxpayers’ compliance burden in over two thirds of the countries studied. However, part of the compliance burden is sometimes an inevitable consequence of express policy decisions, such as measures to make the system more progressive.
The results of the tool also show that, as a VAT regime grows older, the relative compliance burden tends to be higher, and that, from a macroeconomic perspective, the VAT compliance burden is generally higher in less developed countries. Both higher levels of exports as a percentage of GDP, as well as the higher the ratio of tax to GDP in a country, are also associated with a higher compliance burden.
In addition, the diagnostic tool can be used to highlight the importance of best practice VAT policy settings to assist in managing compliance costs, with countries like China and India both recently recognizing the value in having fewer VAT rates which operate off a broad base.
“What will be fascinating is to see the results of this diagnostic tool in a few years’ time as different technology initiatives play an increased role in both VAT collection and enforcement — measures such as real-time tax reporting, the increased use of data and analytics in managing compliance, and the deployment of blockchain technology,” says Lachlan.
The UNSW diagnostic tool has initially been deployed to assess VAT compliance costs, but is expected to be expanded to cater for other business taxes. Adjunct Professor Richard Highfield of the UNSW, says:
“The UNSW team considers that, at this stage, it has sufficient proof of concept to be able to undertake, in collaboration with stakeholders, the development of a broader suite of diagnostic tools designed to measure and evaluate the tax compliance burden of other business taxes, in particular, the corporate income tax; tax regimes applicable to the provision of labor; and customs duties and excises.”
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UNICC and ShelterZoom Developed a Secure Document Tracking and E-Signature Solution for the UN System
The United Nations International Computing Center (UNICC) and ShelterZoom are pleased to announce a new innovative blockchain-based solution for controlling and protecting the digital data of UN entities and other international organizations. As the largest strategic partner for digital solutions and cybersecurity within the UN system, UNICC has partnered with ShelterZoom, a leading data and content protection and ownership SaaS company behind innovations such as Document Token® technology and Document GPS®.
Building upon the 50 years of experienced innovation from the UNICC, the two organizations collaborated on a transformational undertaking offering robust protection and promising increased productivity for document tracking and management. ShelterZoom will contribute its proprietary document tokenization technology, along with its data protection, document tracking and e-signature solutions to deliver a white-labeled platform, giving member organizations a greater level of governance over their content. Using ShelterZoom’s flagship proprietary Single Source Of Truth® technology, the solution provides a means for each file to be protected individually without changing user normal habits instead of having to rely solely on protecting files at the database level. This ‘singularity and control’ is a new era in cybersecurity and document management, which has never been seen before at this level of seamless integration with existing tools.
“The synergy between what we deliver and the goals of the United Nations are a perfect match for Single Source Of Truth,” said Chao Cheng-Shorland, CEO and Cofounder of ShelterZoom. “We have said from the beginning that it is time to think about cybersecurity in a completely new way and in doing so we have created a solution to address other operational pain points while simultaneously solving one of the biggest challenges facing the global population today. The UN is at the frontlines of changing the world for the better and its forward-thinking approach to using technology to address fundamental issues is critical in improving livelihoods for all.”
ShelterZoom solutions have already been in use across dozens of industries and with this new commercial partnership, they can now extend their usefulness to the UN family and other international organizations. The revolutionary method for complete document tracking with built-in productivity tools, such as digital signatures and a market-first method for organizing files inside email, is an all-in-one solution built for a global workforce. The Single Source of Truth model has the added benefit of decreasing the carbon footprint created by excessive digital waste, further supporting the sustainability goals of the United Nations.
“The need for robust cybersecurity and data protection has never been greater,” said Sameer Chauhan, Director of UNICC. “By working together with ShelterZoom, we have developed a cutting-edge tool tailored to the needs of the UN family. Our unwavering commitment to providing best-in-class solutions ensures we continue to support the digital transformation and modernization of the UN system and other international organizations.”
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