Sales Tax Returns

What are Sales Tax Returns?

Sales tax returns specify the tax your company is required to pay on the sale of products and services across jurisdictions.

Sales tax returns outline the amount of product and services tax your company (and its subsidiaries) is liable to pay, across various jurisdictions.

Sales tax is collected from your customers’ purchase transactions and is subsequently filed by your company to the relevant governing authorities. Tax obligations vary across jurisdictions. Failure to file accurate tax on or before the due date will result in penalties, interest and litigations.

What’s recorded?

• Sales Value: Gross sales amount including details of both non-taxable and taxable sales
• Factors: Important facts about your sales that may impact the tax owed according to the rules in each jurisdiction
• Timelines: Frequency of return filing
• Nature: Type and amount of taxes imposed on your company’s offerings
• Credits: Tax credits or returns claimed by your company

It covers both recent and historical tax returns filed by your company across jurisdictions.

Why are Sales Tax Returns important for business today?

Having a comprehensive and up-to-date collection of historic sales tax returns enables your company to:

• Understand how previous returns were files in order to maintain consistency where appropriate
• Have a readily accessible reference for information in old returns for employees to check against

Why are Sales Tax Returns important for an event tomorrow?

Having a comprehensive and up-to-date collection of historic sales tax returns is important for an event tomorrow, as they help:

• Evaluate your company’s capabilities of collecting and filing sales tax with the relevant authorities across jurisdictions
• Determine the amount of tax filed, and the frequency of returns filing by your company
• Assess the taxable and non-taxable offerings in your company’s portfolio
• Validate the sales data published by your company with sales tax returns reviewed by auditors and tax authorities
• Analyze your company’s historical sales growth by leveraging historical sales tax returns
• Reduce the time and cost of due diligence by having the relevant document readily available

Pros of addressing Sales Tax Returns

• Establishes credibility and transparency of your company, as these documents are validated by auditors
• Assists your company to raise funds, as sales tax returns act as strong documentary evidence of your company’s financial performance
• Helps establish uniform internal processes for collect sales tax from your customers and reporting to authorities
• Reduces due diligence time and costs for both management and potential investors

Cons of not addressing this topic

• Increased potential for inconsistencies in tax returns from period to period
• More difficult to conduct a review of historic tax paid or cross check historic numbers
• Increased time and cost of due diligence.