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Published: July 13, 2018

Moving beyond T&E and A/P VAT reclaim

Most finance teams don’t have capacity to verify the compliancy of their expense claims before the approval and payment of them

You’re a solid, smart and hard-working financial director. You’ve streamlined your entire expense management process, you’ve got strong policies in place and your systems are almost automated. You’re also hopefully saving the company thousands of dollars/pounds every year through VAT recovery on your T&E and A/P expenses by using a VAT reclaim agent, and you don’t have to lift a finger to do it.

But, could you be saving even more money in other areas? Are there other indirect taxes and hidden costs sitting elsewhere that you didn’t know existed? Yes, there sure are.

At VAT IT, it’s our job to find new recovery opportunities for our clients so they can really maximise on their savings. So we spend countless hours researching indirect taxes of all kinds to find ways to get those taxes back. Over the years, we have found that while very few companies have the knowledge that they can reclaim VAT on T&E and A/P expenses, even fewer know that other taxes are claimable.

There are so many ways to save your company money and contribute it to your bottom line. And you’re not expected to know them all – that’s why companies like VAT IT exist. Speaking to an expert in the industry can really help you to unlock those extra cash savings lying around your business. All you have to do is ask someone who knows how to find it.

We’d like to spread some knowledge of these hidden taxes so you can empower your company to save more and contribute to your bottom line.

Import Tax

Whether your company is in IT, cloud-computing software, telecommunications, pharmaceuticals, mining or manufacturing – If your company has shipped equipment DDP to foreign countries, you have been incurring significant foreign tax charges. This can include import tax, tax on foreign purchase of equipment and tax on colocation costs. These costs are not always stored in A/P and are sometimes held with the shipping logistics team making it possible to miss in a tax retrieval of A/P expenses. For example, we have 130 telecom and cloud computing clients who we assist with the recovery of Import VAT and save them millions of pounds a year. We managed to save one client alone over 20 million pounds in import tax.

Withholding Taxes

Companies investing in foreign jurisdictions are likely to suffer withholding tax on dividends and interest income. This withholding tax can be recovered through various mechanisms. For a large variety of entities such as individuals, insurance companies, pension fund managers, asset managers and other businesses, this reclaim opportunity is a no brainer and if you’re not doing it currently, you could be losing hundreds of thousands of dollars. For example, one our investment management clients, Prudential may not be able to reclaim high amounts of VAT due to high ratio certificates in the financial services industry, however we save them hundreds of thousands of pounds annually in dividends withholding taxes.

Mineral Oil Tax

For air charter companies and companies that own their own private jets, MOT is a massive amount of duties on the fuelling receipts. Mineral Oil Tax can be claimed in some countries provided certain criteria are met. We have a Private Jet Charter client who is responsible for flying Qatari royal family members between Europe and Qatar and they have saved 2.3 million Euros in Mineral Oil Tax reclaim. It’s definitely worth looking into if you’re a charter operator or own a company jet.

Streamlining Expense Verifications Before Approval and Payments

Most finance teams don’t have capacity to verify the compliancy of their expense claims before the approval and payment of them. So fraud and non-compliancy become a reality. You lose time and you lose money. There are many companies that provide a complete outsourced solution to this problem and can save you from fraud, save you money and make sure your expense claims are 100% compliant.

Service Withholding Tax

Companies involved in cross-border service activity or those which earn foreign royalties are exposed to significant amounts of withholding tax. These taxes are withheld by your customers as a deduction from their final settlement amount of your invoices. Withholding tax rates can be as high as 30% and result in a significant loss to you on your margins. In many instances, this withholding tax can be recovered.

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