Tax Software Firm Tracked 1,100 Sales Tax Changes In 2002

Tax-News.com, London

07 March 2003

Taxware (www.taxware.com), a leading developer of worldwide commercial tax compliance systems and an eONE Global operating company, reported this week that its Tax Research Department tracked 1,100 changes last year to Sales/Use, VAT and GST tax rates worldwide in the 100 countries supported by its WorldTax global tax calculation and compliance solution. Taxware's Tax & Government Affairs Department's team of tax professionals tracked the changes between January 1 and December 31, 2002.

"Our research department reports that the frequency and complexity of changes to transaction tax rates and rules is increasing with each passing year, making it more difficult for companies to remain up to date and compliant," explained Mike Mancinelli, president of Taxware. "Increasingly, companies are finding that they cannot effectively keep track of this level of change without assistance. This may explain why Taxware has witnessed a surge in interest in our automated tax calculation and compliance software packages and services in recent months. By outsourcing tax rate and rule tracking to Taxware, our customers can focus on more important things like tax planning and cost reduction strategies - business issues that directly affect their bottom line."

Recent tax changes in Argentina and Tennessee underscore this point. In November 2002, Argentina's VAT standard rate was reduced from 21 percent to 19 percent for a two-month-only period. Decree 2312/2002 of November 14, 2002, published in the Diario Oficial 30027 on November 15, 2002, became effective on November 18, 2002, just three days later (two of which were over a weekend). "This type of change is difficult for businesses to accommodate and even more difficult to implement, unless your business systems employ a tax calculation engine that can quickly incorporate the latest changes," explained Torsten Fetzer, director of Taxware's Tax Research Department.

In July 2002, the state of Tennessee raised the sales and use tax rate from 6 to7 percent, but added considerable complexity by including a provision for an additional state tax at the rate of 2.75 percent applied to the amounts between $1,600.01 and $3,200.00. This tax was in addition to an existing local option sales tax of 2.75 percent, which is applied to the first $1,600 of a sale. While "food and food ingredients" are excluded from the one percent increase in sales and use tax, candy, dietary supplements and prepared food are not considered "food and food ingredients" and, as such, these items are subject to the increased state tax rate. Furthermore, "food and food ingredients" are not subject to the additional state tax of 2.75 percent.

"Given the challenging worldwide economic market, we can anticipate that states and governments will continue to modify tax regulations in an effort to maximize tax revenues," concludes Fetzer. "As a result, businesses will face an increased tax compliance burden that they will need to manage, either through internal resources, or by adopting an automated tax calculation and compliance solution."

Taxware, a Certified Service Provider for the Streamlined Sales Tax Project (SSTP), supplies a range of solutions that simplify the tax calculation and compliance process for companies based around the globe, including: Sales/Use Tax System, WorldTaxâ, Taxware for e-Commerce and TaxSolverâ.

Taxware's products simplify the tax calculation and compliance process with solutions for sales and use taxes, exemption processing, automated returns, e-commerce transactions, taxing jurisdiction assignment, and value-added tax (VAT) for businesses around the globe. Taxware is a division of govONE Solutions, LP, a market leader in government payments. govONE Solutions is an operating company of eONE Global, LP (www.eoneglobal.com), a leader in emerging payment technologies and systems spanning the government, mobile and enterprise marketplaces.

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