Business executives give VAT a thumbs down

The Tax & Accounting business of Thomson Reuters has announced findings from a recent Sabrix survey on the impact a value added tax (VAT) would have on American businesses. The majority of executives polled are against VAT and agree that it would significantly increase the cost of compliance.

The survey conducted in June and July of 2010 polled 80 tax executives within various business sectors. Their responses indicate the following:

  • 83.5 percent believe that a VAT would significantly increase the cost  of compliance
  • 76.3 percent are against a VAT policy in the United States
  • 67.1 percent of businesses currently do not have any infrastructure (technology, people or processes) in place to comply with VAT in the United States
  • 16.5 percent currently have in-house expertise to comply with VAT in the United States
  • 82.1 percent of businesses need six months to two plus years to prepare for VAT in the United States
  • 51.3 percent believe the streamlined sales tax (SST) initiative has a better chance of success than VAT in the United States

VAT is a tax on the estimated market value added to a product or material at each stage of the manufacturing or distribution process, which is ultimately passed on to the consumer. Like a sales tax, businesses will be burdened with collecting the tax on behalf of the government.

"For affected businesses, achieving compliance with a new VAT would require considerable time, money and effort," said Carla Yrjanson, vice president of Tax Research and Content for Indirect Tax, Thomson Reuters. "For example, in 2008 a simple VAT rate reduction in the United Kingdom was estimated to cost businesses $465 million over two years. Now multiply that amount by initial infrastructure costs as well as an overall economy that is roughly six times that of the UK economy and you can get a sense for just how much it will cost American businesses."

Related articles:

You may like these other stories...

At long last, the Obama administration issued draft instructions along with revised draft tax forms that provide companies guidance on how to comply with the Affordable Care Act’s (ACA) employer mandate.The US Treasury...
Treasury Secretary Lew to speak on tax reform, inversionsDamian Paletta of the Wall Street Journal wrote on Friday that Treasury Secretary Jacob Lew is planning a September 8 speech about a controversial corporate strategy...
The IRS requires most freelancers and other self-employed individuals to use the cash method of accounting, under which income isn't counted until cash, a check, or an e-payment is received, and expenses aren't...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.