Not only direct taxes, but also VAT can, contrary to the VAT principles, be a cost to a business.
PwC has developed tools and methods
- for researching and discovering weaknesses in the VAT cycle
- for significantly improving the VAT structure
- for minimising VAT cost
In principle VAT is a tax that is borne by the ultimate consumer and should not constitute a cost for a business making VATable supplies. However we find that in practice businesses can incur a huge cost when their VAT liabilities are incorrectly managed. Reasons for such costs are:
- High output or input VAT balance
- Late debt collection
- Inappropriate computation of the pro-rata percentage
- Incorrect charging of VAT
Such costs can be avoided through appropriate VAT planning and coordination. The results of this entails:
- Improving the enterprise’s cash-flow balance and releasing capital tied-up unnecessarily
- Minimising costs associated with VAT by allowing better recoverability
- Improving the methodology of the VAT cycle and making more efficient operations
- Identifying areas of weakness to allow corrective actions
