As foreign spending increases and tax rules change quickly, it is vital to have accurate and efficient VAT processes.
Being ready for audits is not optional, it is essential.
Value-Added Tax (VAT) - also known as Goods and Services Tax (GST) in some regions - is a consumption tax applied at each stage of the supply chain. VAT is applied to the increase in value as goods and services move from production to final sale.
VAT is most prevalent in the EU but is also implemented in over 100 other countries including Australia, India, South Africa and Canada.
When employees travel abroad or purchase services internationally, VAT is often charged by the country where the expense is incurred. This is known as foreign VAT.
Eligible expenses typically include:
Businesses can reclaim this VAT, but only if they follow the right procedures and present compliant documentation.
VAT compliance means adhering to tax regulations set by authorities in every country where your business operates, or even just spends. Non-compliance can lead to:
VAT rules change frequently and differ by jurisdiction, making compliance complex, especially for companies operating internationally. That’s why automation and policy enforcement within your expense management system are critical. Read more about 4 common VAT compliance issues and how to avoid them.
VAT recovery is the process of reclaiming VAT paid on eligible business expenses. In many countries, businesses can recover local and foreign VAT – provided they submit valid claims supported by compliant documentation, such as VAT invoices with correct supplier information.
While VAT recovery can bring significant cost savings, it remains underutilised. Common blockers include:
To address these issues, Mobilexpense supports seamless integration with VAT recovery partners.
Our solution allows expense data and documents to be automatically uploaded to your chosen recovery agent. From there, claims are validated, non-compliant records corrected, and submissions filed.
This not only ensures maximum recovery of eligible VAT but also reduces compliance risks, giving you back both time and money.
Today’s VAT landscape is shaped by shifting working patterns, evolving regulations, and increasingly stringent digital reporting requirements. These changes have introduced three key challenges, as highlighted by our partner Blue Dot:
The rise of remote and hybrid work has changed how employees spend. More purchases are made online, using P-cards and personal devices, often outside the oversight of accounting or procurement. As a result, receipts and invoices are often missing critical data, such as VAT rates or supplier information, making them non-compliant and unrecoverable.
"42% of employee-submitted expenses for VAT reimbursement fail compliance checks due to data errors or omissions."
-Blue Dot, "How Can Enterprises Optimise VAT Recovery & Compliance with Advanced AI?" December 7, 2023. Blue Dot.
Traditional systems and partial automation cannot meet the demands of modern tax authorities. Real-time reporting, e-invoicing, and mandatory digital audit trails are becoming the norm. Yet many businesses still rely on manual checks, which are both time-consuming and prone to error.
This increases the likelihood of disqualified claims and exposes organisations to audits and penalties.
VAT rules vary not only from country to country but even by expense type. Managing these differences – especially across siloed systems – is near impossible without a unified, intelligent platform.
According to Blue Dot, without centralised control, businesses risk inconsistent policy enforcement and reduced visibility, weakening both compliance and reclaim efficiency.
With the global VAT landscape becoming increasingly digitised and regulated, companies can no longer overlook VAT recovery or compliance. A modern expense management solution, integrated with automated recovery workflows and AI-driven insights, can unlock significant financial value while safeguarding your organisation against risk.
At Mobilexpense, we’re committed to helping organisations navigate this evolving environment with ease. By combining automation, integration, and trusted partners, we help you recover what’s yours.