2015 Benchmark Survey on Indirect Tax and Trade Compliance

Benchmark Survey on Indirect Tax and Trade Compliance

KPMG‘s Global Indirect Tax Services practice has been carrying out regular benchmark surveys on indirect tax since 2011, and this year, we have also sought the views of trade compliance professionals, to evaluate how companies around the world are approaching these two critical areas.

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Indirect Tax Benchmark Survey

Oversight of indirect tax and trade compliance practices and processes is a major challenge. With a lack of harmonization of tax laws, different countries introducing indirect tax at different times, and constant changes to rates, companies need to gain visibility over practices across their worldwide operations, and establish a consistent approach to compliance. Technology is another key factor in automating processes and eliminating errors. Once they have gained mastery over these ‘basics,’ indirect tax heads can start to look at ways to add value to the business.

Global Trade Compliance is about far more than just avoiding penalties for non-compliance. An effective Trade and Customs team is an integral part of the global supply chain, ensuring that goods are cleared quickly and moved to their appropriate destination. Smart planning can bring a number of valuable benefits, such as lowering duty costs by utilizing regional and bilateral free trade agreements, and making use of free trade zones that allow businesses to bring merchandise into a country without paying immediate duties.

The survey findings and this report paint a vivid picture of current practices, which are augmented by expert views from KPMG practitioners who provide insights into potential best practice, and how these two vital functions can add real value to global organizations.

Click here for a summary of the indirect tax highlights.

Click here for a summary of the trade compliance highlights.

Indirect Tax

  • A lack of metrics can undermine performance.  Only 25 percent of respondents say their company has specific metric to measure performance of the indirect tax function.
  • A growing trend for global leadership. The proportion of respondents with a Global Head of Indirect Tax has risen to 38 percent (68 percent for larger businesses).
  • Indirect tax team remain focused on compliance.  Almost one-third of respondent’s time is devoted to tax returns.
  • Tax may be taking ownership of indirect tax.  The proportion of indirect tax teams reporting into Tax has risen from 41 percent to 52 percent.
  • Centralization is increasing.  In all regions, respondents indicate that while local management of compliance remains the predominant compliance model, centralized preparation of returns is expected to become more common in the next 3 years.
  • Risk Management does not appear to be rising.  Risk identification levels have come down since the 2013 survey.
  • Technology is the key investment priority.  67 percent of respondents say they plan to invest in technology to improve indirect tax management.

Trade Compliance

  • Limited performance management limits visibility to value added.  Just 38 percent of respondents say their companies employ metrics to measure performance.
  • A growing trend for global leadership.  56 percent of respondents have a Global Head of Trade Compliance.
  • Reporting lines indicate a focus on regulatory governance.  More trade compliance teams report into Finance that into any other function.
  • Risk identification and assessment lacking.  A significant proportion of respondents have not identified the key compliance risks facing their companies.
  • A gradual move towards a centralized business model.  Centralization is expected to rise in the years to 2018, becoming the dominant model, accompanied by an increase in outsourcing.
  • Technology seen as key area of future investment.  Almost 30 percent of respondents use no automated global trade solution.

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