Boost cash flow in your business with VAT recovery

Value Added Tax (VAT), known in some countries as a Goods and Services Tax (GST), is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer. Businesses that incur expenses, to generate revenue, can reclaim the VAT on those expenses from the tax authorities. As a response to COVID-19, many governments temporarily reduced their VAT or GST rates in sectors such as hospitality to provide immediate economic relief. As a result, businesses that are running largely manual expense management systems or lack the expertise to keep up with the ever-changing VAT rates have found themselves struggling to keep up with the constantly evolving regulations. They are likely to find themselves at increased risk of violation of VAT compliance requirements, while others may discover they have lost a significant VAT reclaim opportunity.

Companies can realize VAT savings of up to 27% of cross-border and local business expenses in areas like travel and entertainment (T&E) and supplier payments. That's more cash to run the business, reinvest in innovation and R&D, or disburse to employees and shareholders. Companies managing VAT recovery processes internally without the necessary expertise and digital enablement will often struggle to fully process their VAT recovery. Travel and entertainment expenses is an area where there is significant opportunity for recovery. It is also prone to human error, as employees are not tax experts and often want to complete their expense claim as quickly as possible to be reimbursed. This may result in incomplete or incorrect expense entries, missing or non-compliant invoices, and ultimately, non-compliance with regulatory requirements.

Also the high volume of transactions and complex tax laws across multiple jurisdictions can result in minimal VAT compliance review. Finance teams are often not always up to date with country-specific legislations and can struggle to unravel the nuances of complex multi-country VAT regulations.

Putting an effective digital solution in place requires expertise and time that few companies have. Genpact has partnered with VAT IT, the leading global VAT reclaim company, to bring innovative digitalization and analytics-driven problem-solving to the VAT recovery process.

By working with us, businesses will be able to take advantage of Genpact's operational prowess, and AI capabilities, alongside the VAT expertise, powered by the human ingenuity and artificial intelligence of VAT IT, to create a simple yet superior VAT recovery process. Companies can identify missed reclaim opportunities on supplier invoices that are often difficult to identify manually.

Genpact's joint solution with VAT IT starts by extracting invoice data from expense platforms and ERP systems, such as Chrome River and SAP Concur, using Optical Character Recognition (OCR) software. Each invoice is assessed for compliance with country specific VAT rules. Where errors occur, we go the extra mile by contacting suppliers to reissue invoices. The recoverable VAT recovery amounts are calculated and submitted to foreign VAT authorities to facilitate a cash refund for our clients. For domestic VAT reclaims, a schedule of compliant VAT transactions is provided for inclusion in our clients' local VAT returns.

But process automation isn't the whole story. We also take a deeper dive into transactions where VAT reclaim wasn't possible. Our experts perform root cause analysis on each transaction to identify opportunities for higher recovery or areas of non-compliance. Equipped with insights coming out of the analysis, we advise our clients on new policies, processes, and enhancements to their systems to improve VAT reimbursements.

Two elements of our VAT recovery solution stand out. First, our robust VAT rules engine and AI technology enables maximum VAT recovery while keeping companies up to date with claim rules and invoice compliance requirements. And second, our interactive and customizable dashboards extract data from the automated solutions and provide management with an overview of VAT reclaim health. This means management has enhanced visibility of VAT spend and recoverability and greater control over KPIs.

Each client is unique, so Genpact and VAT IT run each VAT recovery project to fit the unique corporate situation. We work with our clients to understand their current VAT processing and recovery landscape, processes, and key challenges – whether with systems, data, or personnel – and provide targeted resolutions. The scope of the work is determined by each client, which may be specific to one entity in a geographical location, but often globally across multiple continents. We not only submit recovery claims for our clients, but support the claim throughout its journey to refund, including any time-consuming tax office query resolution.

Client involvement is light touch. Once we have the relevant access and permissions, management need only give a couple of hours a week during initial implementation. Thereafter, we take care of the VAT refund process from start to finish.

Our ultimate goal is to provide our clients with automated systems that reduce errors, streamline workflows, and maximize the opportunity for recovery. But we also use the findings from our VAT recovery analysis to identify areas of improvement, meaning that the client gains an ever-greater return on their investment and confidence that they will remain compliant continually.

Our technology, service, and expert-driven alliance have demonstrable success. Average additional recovery on T&E and supplier spend alone is between 10% and 20% in jurisdictions where reclaim is possible.

And given the universal importance of VAT, the scope for success is not limited to any specific industry. We helped an aircraft manufacturer retrieve $11.4 million and a global conglomerate successfully reclaim US $4.4 million.