VAT compliance: The impact on business and how technology can help

How is modern technology affecting VAT compliance?

As the world becomes more connected and the digital economy comes of age through mobile technology, cloud computing, business intelligence and real time reporting, we see an increasing number of tax authorities and businesses around the world adopting or reforming their VAT compliance systems to take advantage of the opportunities afforded by technological developments.

Using the data from the Paying Taxes study, we look at how the VAT compliance burden for businesses has changed globally since our last VAT review in 2010.

Key findings

According to Paying Taxes 2017, 162 economies have a VAT system with the annual time to comply with VAT for the case study company ranging from 8 hours per year in Switzerland to 1,189 hours in Brazil.

The time to comply varies even between countries of a similar level of development and with VAT systems which are similar in principle.

It takes 27% less time on average to comply with VAT obligations in countries where businesses pay and file VAT online.

Could real-time reporting systems make VAT refunds more efficient?

Paying Taxes 2017, shows that on average it would take our case study company on average 21.6 weeks to receive a VAT refund, though this varies considerably by region. Could the move towards a greater use of technology by tax authorities and businesses, including more real-time reporting systems, help to make VAT refunds more efficient as well as reducing fraud and potentially increasing tax authorities’ risk assessment and identification? What do businesses need to do to prepare for the introduction of new technologies?

Average time to obtain a VAT refund (weeks) by geographic region

Contact us

Robert Li

Indirect Tax Leader, PwC China

Tel: +[86] (21) 2323 2596

Michael Ma

Partner, PwC China

Tel: +[86] (21) 2323 3743

Yolanda Lv

Partner , PwC China

Tel: +[86] (21) 2323 3206

Ann Kwok

China and Hong Kong Tax Technology Leader, PwC China

Tel: +[86] (21) 2323 3808

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