VAT is an efficient instrument for taxation for governments but is often a huge source of headache and even lost capital for companies and organisations. In international business especially.
Here are the top 3 reasons why it is so complex in international business:
Despite efforts to harmonise, for example by the European Union, there are still big differences between countries. Various tax rates, dates and reporting routines quickly become overwhelming, especially for small businesses without the resources of a full-staffed accounts payable department.
It takes effort and expertise to keep track of new regulations. The changing regulatory landscape is an ongoing cause for concern, from the EU court of justice and commission to every national and local authority.
New regulations causes confusion on a regular basis. Despite all available sources, from taxation levels to precedents, uncertainties occur when new rules and regulations have become implemented.