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