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Three-quarters of organisations fail to automate excise tax
23 June 2015
Avalara and Aberdeen Group research revealsorganisations are hindering growth throughreliance on static systems.
Avalara today announced the initial
findings of industry research into excise taxmanagement,
conducted by Aberdeen Research Group.
Excise duties typically contribute a staggering 10% of
annual government funds, yet new research reveals vast
resources are being wasted by organisations struggling to
keep pace with hundreds of global regulatory changes each
year, contributing to inefficient management of these
taxes.
The research's top findings were:
73% of organisations rely on ERP software not
designed to manage excise tax: 15% actually use
spreadsheets to produce excise returns;
65% are using internal resources to keep track of
changing legislation;
Industry 'Leaders' are 45% more likely
to have an excise tax engine: 22% of these improved
the time taken in addressing tax errors over the
past two
years.
"In the tax world, excise taxes create a significant
compliance burden to organisations, yet it is one of the
tax areas least served by technology," said Kid Misso,
Director of Pre-Sales Excise at Avalara.
"The upcoming UK Finance Bill 2015 is consistent with
legislation in many other countries that seeks to
eliminate as much revenue leakage as possible by
tightening controls on taxpayers and reducing fraud. In
particular, legislation that forces organisations who
trade in dutiable goods to implement specific due
diligence activities around their supply chain as well
as requiring over twenty thousand alcohol wholesalers
to register for approvals to trade only further
increases the burden on companies and increases the
need for systems that support excise."
The study found that 73% of organisations rely mostly
on their Enterprise Resource Planning
(ERP) solutions for excise tax management, even
though these systems are not designed to handle these
tasks. This is surprising given that the biggest
challenge identified by the organisations surveyed is
keeping up-to-date with highly dynamic legislative
requirements from government (33%), followed closely
by the challenge of combining tax information from
disparate ERP or ecommerce systems (26%).
Identifying the best-performing businesses as
'Leaders', the research found that
this group is 45% more likely than
'Followers' to have an excise tax
engine. 28% of Leaders use dedicated software for
their excise tax returns, compared to just 2% of
Followers, while organisations with specific excise
engines saw a 22% improvement in the time
addressing tax errors over the past two years,
helping reduce the work required, while helping
avoid fines and maintaining profit margins.
Nick Castellina, Research Director at Aberdeen
Group, said: "We are pleased to
have worked with Avalara to conduct a survey
across Europe and both North and South America,
analysing the excise tax management process of
over 80 leading organisations. The research
revealed some noticeable trends between Leaders
and Followers within the industry and we hope
this helps organisations recognise the economic
benefits that could arise from streamlining
resources with processes designed specifically
for excise tax."
Misso added: "Almost two-thirds (65%) of
respondents indicated they are dedicating
costly internal resources to keep track of
changing legislation. It typically takes an
average of almost 19 days to update a system in
response to an excise tax change and too many
organisations managing excise taxes in alcohol,
fuel and tobacco are inefficiently expending
human and financial resources to try to keep up
with their tax obligations, whereas
today's technology allows them to
automate these complex processes."
Kid Misso from Avalara and Nick Castellina
from Aberdeen conducted a free webinar on
these findings and more on Tuesday
23rd June. If
you'd like to hear more about
the survey and how to take advantage of the
benefits of an excise tax compliance system,
listen to the webinar.
http://feedproxy.google.com/~r/internationaltaxreview/wrOZ/~3/4HQcImEu04E/Three-quarters-of-organisations-fail-to-automate-excise-tax.html