Managing taxes as trends take hold will keep brokers’ costs down

Managing taxes as trends take hold will keep brokers’ costs down | Insurance Business

Managing taxes as trends take hold will keep brokers’ costs down

Brokers will have to be increasingly aware of trends in taxation this year if they are to save on costs.

According to global consultancy firm Ernst & Young, GST rates are increasing, excise duties are rising, free trade is also growing but is meeting protectionist challenges, the indirect tax system is becoming more efficient, and tax administrations are focussing on compliance and enforcement.

This is all likely to have an impact on how international brokers are run.

Surveying more than 190 countries including Australia, E&Y noted the rise in GST is likely to result in a greater compliance risk.

“Companies must ensure that all the increases are properly dealt with in their accounting and reporting systems, which often results in a range of IT and administrative costs,” a spokesman said.

E&Y reported that the percentage of government revenues received from excise duties has seen a constant decline over recent years. However, this development has slowed down and we might see a turn in the opposite direction as excise rates are rising and new duties are being introduced.

Market analysis also suggests that while global trade is boosted by a constant reduction in customs duties around the world, as the downturn continues many countries are turning to protectionist measures where they can.

Additionally, emerging market countries are reforming their indirect taxes to improve administration and to adopt GST systems that are more in line with global models. At the same time, developed GST systems have to adapt to the demands of a 21st- century economy.

The growing importance of indirect taxes to governments places more pressure on tax administrations to enforce compliance. This focus is leading to greater scrutiny of taxpayers’ affairs through more frequent and more effective tax audits and greater consequences for errors.

“It pays to proactively manage indirect taxes,” a spokesman said. “Establishing a clear, indirect tax strategy aligned to your overall business strategy will help you keep your business up to date with the rapidly changing tax environment and avoid additional costs and risks of poor compliance or missed opportunities.”