Mitigate Indirect Tax Errors and Safeguard your organization

For every enterprise, irrespective of the size, calculating and getting the indirect taxes right is vital and indispensable. Indirect taxes affect a company’s cash flow and bottom-line. As companies expand in size and reach, indirect tax obligations and reporting requirements expand as well.

Businesses bear an obligation to track all relevant indirect taxes, make accurate calculations, and pay them on time. Any shortcoming in the process results in heavy fines and penalties, which sets in motion a cost-intensive process of re-evaluation and course correction that creates disturbances in other parts of the company. Companies become less responsive and agile as resources are diverted to address tax issues.

Inaccurate tax calculations have dire ramifications — it can impede an organization’s market competitiveness; it incurs penalties that impact the bottom line and affect product prices. Taxation errors can affect a company’s public perception, reputation, and customer loyalty.

Additionally, overpaid taxes cannot be reclaimed and cut short the revenue, which can otherwise be used in other developmental processes. At the same time, under-paying taxes have ill consequences like penalties and unexpected costs, which affect the balance sheet. Thus, companies should heed accurate indirect tax calculation, which is an integral part of a company’s obligation..

Challenges With Indirect Tax Calculations

Tax calculation is one area where companies may face challenges and can encounter financial risk if not done properly. Additionally, accurate tax calculation demands enterprises to stay updated with changing legislative regulations, new rules, or shifts in rates, which is often an arduous task to achieve. Companies relying on basic accounting systems for tax calculations or even calculating them manually can exacerbate tax calculation errors. 

Furthermore, taxation of goods and services is constantly shifting with changing reporting requirements that demand a new level of detail as tax authorities look to get closer to the source data and systems. 

Indirect tax professionals are challenged to keep pace with the changes and need an expansive knowledge of the tax codes and regimes for accurate calculations. The dynamism and complexity of taxes increase the chances of calculation errors which lead to other ramifications.