Rise in Tax Changes Increase Administrative Burden on Businesses

by CFO Innovation Asia Staff, 03 August 2012

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Accounting and Regulations Tax

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indirect taxes tax VAT

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Worldwide, there were 379 percent more indirect tax changes in the second quarter of 2012 than there were during the same period in 2011, according to the latest ONESOURCE Indirect Tax rate report from Thomson Reuters.

There were 1,025 tax code changes in Q2 2012, compared with 270 in Q2 2011. This includes 109 indirect tax increases, down slightly from 124 in Q2 2011.

“Globally, businesses had to comply with over 1,000 tax changes this past quarter. That’s a huge burden,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “Whether the changes are increases, decreases or exemptions, the cost to implement them is essentially the same for businesses. Without the right technology, domain expertise and accurate tax information at the country and jurisdiction levels, it’s difficult to achieve compliance in a cost effective manner.”

The number of value added tax rate increases globally declined from 13 to 5, finds the report.

In Asia, China added a 7 percent rate for the purchase of transportation services retroactive to January 1, 2009. India increased the standard serviced tax from 10 percent to 12 percent effective April 1, 2012.

In the U.S., the average state sales tax was 5.48 percent in Q1 2012, down from 5.52 percent in Q1 2011.

In Europe, the VAT rate for Madira, Portugal was increased and Norway ended its temporary 13 percent reduced rate, which was originally enacted December 31, 2006.

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