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Compliance can be problematic for businesses that make supplier and partner payments, and governments are starting to take notice.
In addition to the already tenuous relationship with sharing and gig economy marketplaces, governments aren’t excited about the lack of regulation and potential loss of revenue. And they are on a singular mission to add additional oversight.
In today’s landscape, financial professionals must be vigilant in providing accurate, required tax documentation. If they don’t, the risk far outweighs the reward. Not only will your clients be faced with withholding penalties and compliance exposure, but the fines could be as high as 30% of the transaction. Plus, compliance exposures could cost your clients additional issues and increased scrutiny within the course of an audit.
Make no mistake about it; it’s in everyone’s best interest to conquer the complex nature of compliance.
3 Steps to Global Tax Relief
Step 1: Streamline the onboarding process for suppliers and partners.
It’s essential to gather tax information from payees during this crucial time. Be proactive and collect tax identities and any supporting documentation at the beginning of this process. For the US, this includes W-9 and W-8 series tax forms that adhere to the requirements outlined by the IRS. Globally, it involves collecting and validating VAT IDs. Gathering this information upfront reduces risk and regulatory exposure while simplifying the year-end rush to request this information.
Additionally, ensure that your onboarding process reduces the number of duplicate payees. Collecting tax IDs is a simple solution, but consider taking fraud mitigation to the next level by adopting an automated payments solution. A streamlined system can be used to verify information provided by the payee during the onboarding process. At a minimum, screen payees against government blacklists such as the OFAC SDN before every payment.
Step 2: Be IRS-compliant and mitigate tax risks.
Ensure that your processes comply with all IRS tax provisions by meeting the IRS requirements, as prescribed by KPMG. Accomplish this for your clients by optionally setting tax ID submission as a requirement during onboarding.
As your clients’ grow, consider digitizing tax form collection and validation. Allows suppliers to choose the correct form based on their country and business structure. Collect proper data by applying 1,000+ rules (including TIN matching). And generate tax preparation reports by calculating any necessary withholdings at year-end.
Step 3: Help your clients expand globally with increased international tax capabilities.
For non-US payers, ensure that world-wide local and VAT tax ID collection is available. Implement a solution that supports document collection, allowing suppliers to add information and approve self-billing invoices before the payment is processed. Plus, having an automated, built-in tax engine will validate against 3,000+ rules to help prevent ID errors and issues.
Today, international tax requirements are consistently falling on the shoulders of the Accounts Payable team. The IRS requires greater compliance to report payments made to foreign entities, and the US government is responding by hiring and training over 3,000 IRS examiners. Don’t allow your clients to fall short—successfully manage global tax requirements and feel the relief of conquering compliance.
The end of the year is coming. Hear from the experts at KPMG LLP on creating compliant processes for handling tax requirements when dealing with domestic and international suppliers as you close out 2019 and head into 2020.
In this webinar, Laurie Hatten-Boyd, Principal at KPMG LLP, will explain how tax requirements impact organizations with global supplier bases and the legal and financial penalties for non-compliance.
Register now to learn how to master:
- IRS tax rules as they relate to paying global suppliers (including Chapter 3)
- Steps for avoiding legal and financial penalties
- Conquering complex W8 and 1042s situations
- Ensuring proper withholding
Register for the Webinar “Hot Topics for Global Tax Requirements in AP: Featuring KPMG.