Indirect Taxes a “burning issue”, according to Deloitte survey
A survey conducted recently by Deloitte & Touche LLP, indicates that Indirect Taxes such as Goods and Services Tax (GST) and Customs Duty are gaining a higher profile with businesses operating in Singapore.
More than 100 in-house advisers participated in the Deloitte survey “Asia Pacific Indirect Tax Burning Issues 2010” carried out in April and approximately 50% reported that their organisation’s Indirect Tax risk has increased over the last 12 months. A majority said that GST and/or Customs Duty will be a principal focus area for the next 12 months.
Robert Tsang, Deloitte’s Asia Pacific Indirect Tax Leader, commented that “as the landscape beyond the global financial crisis starts to emerge, managing cash and risk well become two vital and interlinked goals for businesses operating across borders. The more market conditions improve and business activities increase, the more important ‘transaction-based’ Indirect Taxes like GST and Customs Duty become. This need to manage Indirect Tax compliance effectively is reflected in the results of our latest Asia Pacific Indirect Tax Burning Issues Survey.”
Many companies in the Asia Pacific region do not have sufficient time and resources to deal with indirect tax. The majority of respondents surveyed have responsibility for wider tax advisory and compliance and/or general finance, in addition to indirect tax. Allocation of more resources to dealing with the challenges of GST and Customs Duty was highlighted as one of the key things that would have the greatest impact on a company’s indirect tax department’s ability to add value to the overall business.
In terms of what was the biggest “burning” indirect tax issue for businesses, more than 35% of respondents surveyed commented that this was systems and processes, with eight out of 10 respondents stating that they felt there is some room for improvement in existing procedures and that they needed to focus on this area in the future.
“This is not surprising as Indirect Tax compliance requirements and obligations are on the rise in many jurisdictions across Asia Pacific, and systems and processes need to evolve to keep up”, Richard Mackender, Director of Taxes in Deloitte Singapore’s GST practice commented. “Businesses should be aware that the Inland Revenue Authority of Singapore (IRAS) is paying increasing attention to Indirect Tax processes. This is evident in some recent initiatives launched by IRAS to improve the overall level of compliance amongst taxpayers, such as the GST Assisted Self-Help Kit (ASK)”.
“What the survey shows is that the majority of businesses will continue to focus on indirect tax. It is right that the IRAS’ message on the importance of compliance is picked up. Businesses need to think how they can respond to the challenge”, Mr Tsang added.
For more details on the survey, please see the pdf document below.