Last Updated on January 29, 2024
Businesses Can Benefit from Efficient VAT Reclaim Methods
Value added tax, also known as goods and services tax, can usually be claimed for purchases used for business. What’s more, you can claim part of your private purchases – if you use a part of it for business. For big businesses, it’s much more than that.
The most common expenses for business VAT are import VAT on foreign purchases, vendor service charges, employee travel and accommodation, and local purchase of goods. A big portion of this are employee’s expenses, so it’s essential that everybody is in the same page regarding what expenses are eligible for VAT reclaim.
Getting things right at the beginning and making sure that employees know what is needed from them will result in less errors in the whole process of reclaiming VAT.
Businesses need to get their VAT refund so that they can maximize their profit and capital spending. According to statistics, over millions are lost in unclaimed VAT yearly.
VAT Reclaim Methods for Efficiency
VAT reimbursement needs a high level of global expertise and experience since different city, countries and continents have different approaches and tax laws. It’s a good thing that modern technology has come up with solutions on reclaiming value added tax and other tax functions. Read more on VAT reclaim for businesses.
Depending on where the expenses were made, invoices and receipts are subjected to the VAT laws of the country. Expenses that should be considered for VAT refund claims are divided into three categories: (1) refundable, (2) partial, (3) with restrictions.
Lastly, sometimes businesses include personal expenses but it is important that they be kept separate. Whenever you are traveling for the purpose of business, the official receipt should contain the name of the company and not the name of the employee.
The best advice for efficiently reclaiming VAT is when all employees hold on to their official receipts. Aside from that, the receipts should have the following information:
- The company name and address of the one that wants to reclaim VAT.
- The company name, address and VAT registration number of the shop or accommodation.
- Detailed description of received goods or services.
- Amount without VAT
- Amount of VAT charged, along with rate
Reclaiming VAT can be laborious, tedious, but also complicated. To manage the complexities of VAT in different countries, businesses would need numerous employees and expertise – which would be labor-intensive. Despite that, human error can occur, which would further the costs incurred. One wrongly ticked box can result in non-compliance and can result in lost money to rectify the error.
New Technology Helps in VAT Transactions
Human error can be seen in almost all stages of the VAT reimbursement process. So why not employ software to help cut costs, save time, and be more efficient?
The bonus is that having a software can deal with the problem of changing regulation adhered to in every country. VAT technology minimizes the human involvement and the human errors.
When VAT laws get changed, the changes are automatically applied to the full VAT recovery process, making VAT reclaim a more streamlined and accurate process. You can easily save time and save money with VAT software.