Vertex Highlights Global Indirect Tax Trends for 2022
04 Aprile 2022 - 1:30PM
Vertex, Inc. (NASDAQ:VERX) ("Vertex" or the "Company"), a
global provider of tax technology solutions, outlines tax trends
for 2022. Corporate tax departments should expect continued
transaction tax complexity and these taxes will continue to be an
increasingly convenient and effective way for state and local tax
jurisdictions to raise revenue. In addition, tax audits around the
globe have returned to pre-pandemic levels.
According to Vertex Vice President of Tax Content and Chief Tax
Officer Michael Bernard, there are a couple of key trends on the
regulatory side that will impact the future of transaction
taxes:
- U.S. states are increasingly looking to replace their income
tax with more of a “transaction-based source of revenue.” Why?
- Transaction based revenue streams are less susceptible to
adverse economic cycles relative to the income tax.
- Transaction taxes are generally easier to administer (and
audit) relative to the income tax because of the many complex
preferences built into the income tax from both a federal and state
legislative perspective.
- Transaction taxes are generally easier to expand by “local
jurisdictions” either by implementing new or higher rates. Both
state and locals can expand the base easily to new business streams
– namely digital products, services, crypto currencies, tobacco,
alcohol, firearms and environmental fees.
- Outside the U.S., countries continue
to rely heavily on VAT as seen through stepping up the expansion of
real-time and near-time reporting, as well as digitizing the
registration process to include a smooth onboarding of
taxpayers.
In the past year jurisdictions in the U.S. continued to broaden
the tax base with 197 new district taxes implemented, the second
highest in the last decade. New district taxes were enacted in
order to fund community improvements, transportation, transit
upgrades, and emergency services, among other necessary public
services. In addition, the vast majority of sales tax rate changes
in 2021 were increases at the city (85%) and county (72%) levels.
This trend is continuing with 23 new district taxes added in the
first two months of 2022 bringing the total supported by Vertex to
2,743 including metropolitan, public improvement and resort
districts.
Outside the U.S., tax administrations are attempting to close
tax gaps by implementing electronic invoicing, while businesses are
dealing with a myriad of tax regulations that include cross-border
tax compliance and supply chain issues, as well as global labor
shortages.
“Businesses may be affected by not being able to import certain
products and are shifting to regional suppliers, which could change
the obligation to collect and remit sales taxes or VAT in new
jurisdictions,” said Bernard. “Companies are also establishing
hybrid working policies to attract and retain staff, which can also
change the nexus footprint.”
To date 45 states and the District of Columbia have adopted
economic nexus laws that continue to evolve in dollar and
transaction threshold amounts. “While electronic invoicing,
real-time reporting and similar digital tax regimes have yet to
reach the U.S., it is clear that some states are beginning to
consider proposals for these types of taxes,” added Bernard. “Tax
authorities throughout the European Union and other global regions
have embraced digital transformation and it seems inevitable that
jurisdictions in the U.S. will soon follow suit.”
In addition, states are now actively trying to tax data which is
derived from the e-commerce buying process. For example, the state
of Washington has proposed legislation that would impose a tax on
the sales or exchange of personal data that would be equal to the
gross income of the business multiplied by 1.8%.
For the Vertex End-of-Year Sales Tax Rates and Rules Report for
2021, click here.
Vertex is a leading global provider of indirect tax software and
solutions. The company’s mission is to deliver the most trusted tax
technology enabling global businesses to transact, comply and grow
with confidence. Vertex provides solutions that can be tailored to
specific industries for major lines of indirect tax, including
sales and consumer use, value added and payroll. Headquartered in
North America, and with offices in South America and Europe, Vertex
employs over 1,300 professionals and serves companies across the
globe.
For more information, visit www.vertexinc.com or
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Copyright © 2022 Vertex, Inc. All rights reserved. The
information contained herein is intended for information purposes
only, may change at any time in the future, and is not legal or tax
advice. The product direction and potential roadmap information is
not a guarantee, may not be incorporated into any contract, and is
not a commitment to deliver any material, code, or functionality.
This information should not be relied upon in making purchasing,
legal, or tax decisions. The development, release, and timing of
any features or functionality described for Vertex’s products
remains at the sole discretion of Vertex, Inc. Any statements in
this release that are not historical facts are forward-looking
statements as defined in the U.S. Private Securities Litigation
Reform Act of 1995. All forward-looking statements are subject to
various risks and uncertainties described in Vertex’s filings with
the US Securities and Exchange Commission (“SEC”) that could cause
actual results to differ materially from expectations. Vertex
cautions readers not to place undue reliance on these
forward-looking statements which Vertex has no obligation to
update.
Company contact:Marisa NorrisVertex,
Inc. marisa.norris@vertexinc.com484.595.2520Investor
Relations contact:Ankit Hira or Ed Yuen Solebury
Trout for Vertex,
Inc. ir@vertexinc.com 610.312.2890
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